Executive Summary

The ACTU supports the intent of the Government to improve the quality, breadth, and regularity of climate disclosure as an important step in improving the ability for investors, regulators and the public to make informed decisions and policy to reduce emissions from the activities of Australian companies. Investors have a broad set of responsibilities to ensure the assets they invest in on behalf of their beneficiaries do not breach Environmental, Social and Governance (ESG) standards. While many attempt to meet this responsibility, information gaps between companies and their investors often inhibit meaningful decision-making, hinder effective stewardship, make it difficult to track substantive progress or make reasonable comparisons. Australian companies largely determine themselves what and how to make disclosures, and often use their own definitions to do so. As a result investors and the public face an increased cost in understanding the interpreting the nature of the disclosures made.

Taking action immediately to address this on the topic of climate change is welcome, and the ACTU notes and supports that the consultation paper outlines the Government will develop broad sustainable finance architecture. The reform principles upon which the consultation is based are sound. The union movement, however, believes that meeting new global minimum standards will not be making the most of the opportunity available to us. Australia has an opportunity and, in particular for addressing climate risk, a responsibility to lead in this space. Where improving disclosure standards for investors, Australia can make a contribution to the international investment community, Australian investors and their beneficiaries, by developing world-leading standards and taxonomy.

The ACTU supports substantive disclosures from businesses on the level of emissions, the progress of decarbonisation and meaningful plans presented to the public about the pathway to meeting net zero emissions, consistent with national targets. Companies should have detailed plans regarding how and when they expect to decarbonise, and what impact that will have on their businesses. Global disclosure standards like those issued by the International Sustainability Standards Board (ISSB) deem this a minimum, and that is a minimum Australia should immediately meet. 

An area the union movement seeks to improve disclosure from companies is labour standards, generally and in the area of climate to ensure companies are engaging in a just transition through decarbonisation. The Paris Agreement requires signatories to ‘take into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs’ and implementing this in climate related financial disclosures will be an important step to meeting this goal.

The ACTU’s primary recommendation in this submission is that when Treasury develops the Climate-related financial disclosure guidelines, companies are required to disclose the impact of their decarbonisation strategy on their workforce and the engagement with unions. The ACTU developed a Just Transition Guide for investors for their use in stewardship conversations, which outlines key items that companies should disclose, plans they should have, and reporting which investors should have access to. All items disclosed should provide investors an understanding of both the impact of policies and strategies on people and their communities, and the gender impact of the company’s strategy.