Australian legal authorities have raised alarm over a Treasury proposition to impose a three-year hiatus on private litigation for companies’ climate-related statements.
The New South Wales Bar Association and the Environmental Defenders Office (EDO) fear the proposed moratorium may impede justice and hamper Australia's commitment to a 43% reduction in emissions by 2030 from 2005 levels.
The EDO, engaged in legal proceedings against Santos over alleged greenwashing, warns of the moratorium's ramifications, potentially halting similar actions until 2028.
Devised by Treasury, it is part of a comprehensive overhaul of corporate reporting on climate-related risks, aiming to facilitate the transition towards mandatory disclosures from July 2024.
Treasury's rationale centres on fears of reticence in corporate climate disclosures due to apprehensions of litigation. The proposed period of exclusivity for regulatory action by entities such as ASIC is perceived as a necessary shield while companies adapt to the new reporting standards.
A contentious issue
While some view the measure as potentially stalling crucial climate litigation, others, such as University of Melbourne researcher Rebekkah Markey-Towler, prefer to focus on the broader impact of the disclosure frameworks and the array of tools being implemented for climate action.
"There are many other tools that are important being put in place at the moment … the sustainable finance taxonomy and strategy, the safeguard mechanism, all the other regulator work," Markey-Towler said.
Industry bodies, meanwhile, are advocating for a longer grace period, with the Association of Superannuation Funds requesting a minimum of four years, echoing concerns over the challenging nature of Scope 3 emissions reporting.
The Treasury concedes the complexity involved, acknowledging the majority of Scope 3 disclosures would likely be estimates.
The impending shift to the new Australian climate standards has provoked concerns about the readiness of the financial sector, with a palpable skills gap in climate-literate professionals noted. The effectiveness of the new disclosure framework hinges on the sector's capacity to develop and utilise these critical competencies.
As the consultation process on Australia's new climate financial disclosure standards continues until March 1, the legal and financial communities await the government's finalised positions, with draft legislation anticipated before year's end.