In a landmark move for sustainability and corporate responsibility, Australia has passed new legislation requiring mandatory climate-related financial disclosures. Set to take effect in 2025, this law represents a significant step forward in the global push for transparency on climate risks and opportunities. At Climate Salad, we believe this is a pivotal moment for both the climate technology industry and the broader business landscape in Australia.
What the New Law Entails
The legislation mandates that large businesses and financial institutions report on how they are managing climate-related risks and integrating them into their decision-making processes. This will align Australia with global frameworks, particularly the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which are already in place in countries such as the UK, New Zealand, and the EU.
The law will apply to large, publicly listed companies and significant financial entities. These organisations will need to disclose detailed information about their climate risk exposures, the financial impacts of climate change on their operations, and the steps they are taking to mitigate those risks. For many businesses, this represents a significant shift in the level of transparency required, pushing climate considerations into the boardroom and onto balance sheets.
A Big Opportunity for Climate Tech
While some companies may view these new reporting obligations as a challenge, we at Climate Salad see them as a tremendous opportunity for the climate tech sector. With over 600 climate tech companies in our network, we know firsthand that innovation thrives in environments where sustainability is prioritised. This new law will accelerate demand for climate solutions, from carbon management tools to energy-efficient technologies, as companies scramble to address the risks that climate change poses to their financial health.
For climate tech startups and scale-ups, the law presents a unique window of opportunity. Companies will be under pressure to adapt and adopt new technologies that can help them not only meet these reporting requirements but also actively reduce their carbon footprints. Solutions like emissions tracking software, renewable energy innovations, and supply chain optimization tools are likely to see increased demand as a result.
Preparing for the Future
For the businesses affected by this law, preparation will be key. The challenge of accurately assessing and reporting climate risks is complex, but it is also essential for long-term resilience. Climate Salad encourages companies to engage with climate tech firms early to ensure they are equipped to meet these new standards.
The Australian government’s move to mandate climate disclosures also highlights a broader shift in the global business landscape: companies will increasingly be judged not just on their financial performance but on how they manage environmental and social risks. Businesses that fail to take climate-related risks seriously will face growing scrutiny from investors, regulators, and consumers alike.
Impacts on Investment
The new law will also have a major impact on the investment community. Investors, particularly institutional ones, have been seeking greater transparency on climate risks to inform their decision-making. The mandatory disclosure requirements will provide them with the data they need to assess which companies are best positioned to thrive in a low-carbon future. This could lead to a reallocation of capital towards businesses that are proactive in managing their climate risks.
For climate tech investors, this could mark the start of a new era of growth. As businesses are incentivized to adopt climate solutions, the market for innovative technologies is likely to expand rapidly, attracting increased attention from both venture capitalists and institutional investors.
Challenges Ahead
Of course, implementing these disclosures will come with its challenges. Many companies may lack the internal expertise or the technology to accurately assess and report on climate risks. This could drive up demand for consulting services and climate data solutions. Furthermore, some industries—particularly those with high emissions or those dependent on fossil fuels—may struggle to comply without undergoing significant operational shifts.
However, for businesses that embrace the change, there will be long-term rewards. Companies that adopt a proactive approach to climate risk management will not only meet regulatory requirements but also gain a competitive edge. They will be better equipped to navigate the physical and transitional risks posed by climate change, while also appealing to investors and consumers who increasingly value sustainability.
A New Chapter for Climate Responsibility
Australia’s new climate disclosure laws are a clear sign that the country is moving towards greater climate responsibility. For climate tech companies, this is a call to action. The future of business is green, and those that can offer solutions to help companies navigate this transition will thrive in the years to come.
At Climate Salad, we are committed to supporting climate tech businesses through this new regulatory landscape. Our community of innovators, investors, and entrepreneurs is perfectly positioned to seize the opportunities presented by this legislation. As the world moves toward a more transparent and accountable approach to managing climate risks, the role of technology in shaping a sustainable future has never been more important.
Insights from Our Network
Cat Long, Co-Founder & CEO, Trace
With regards to scope 3, companies have been given one year grace period and limited directors’ liability, so critics have argued the original requirements have been watered down. However, from my perspective, this is still a huge and significant shift in reporting requirements, especially for companies in group 3, most of whom do not publicly disclose their financial performance, let alone their climate risks and opportunities. The good news is measuring carbon emissions is not as complex as it sounds, especially for small companies. At Trace, we pride ourselves in helping SME confidently measure, manage and report their emissions leveraging the data and resources available to them. My advice is to start early: you don’t want to be figuring out how to measure your carbon emissions and climate risks for the first time in public or when your biggest client asks you to!
Misha Cajic, Co-Founder & Co-CEO, Avarni
‍This law has already begun impacting companies that it doesn't even directly cover. We've had an increase in inbound inquiries from companies that have been informed they'll be required to provide data as suppliers of organisations that meet the first threshold. They're now treating it as a business continuity risk and they need help.
Evannah Jayne, Founder & CEO, Terran Industries
‍We welcome the new mandatory climate reporting regulations in Australia and believe they represent a critical step toward driving real climate action. By holding businesses accountable, these regulations should lead to more tangible efforts in combating climate change. As a global climate risk management firm, we are committed to supporting companies in navigating these new requirements and helping them make meaningful progress toward sustainability goals while ensuring compliance and reducing risks.
Marc Allen, Co-Founder & CSO, Unravel Carbon
‍It's been a long time coming and should certainly not be a surprise to any company in Australia. A huge change in the corporate reporting landscape and will require a lot of pretty rapid upskilling by boards and senior leadership of companies to ensure compliance. A welcome addition in the context of transparency and decision-making though. Of course, everything comes down to data now - having that strong foundation from which to analyse current and future company performance and the impacts of climate risk on bottom line into the future.
Roger Cohen, Founder, C2Zero
‍It’s great to see this taking shape. Hopefully, tracking the numbers and monitoring progress will come soon, helping to distinguish the leaders from the laggards.
Jessica Richardson, Co-Founder & CEO, Sumday‍
Mandatory reporting is the moment sustainability truly enters the boardroom. It’s about integrating sustainability into the core language of the business. Transparent, trustworthy data will drive decisions, making things like carbon a metric of success, just like profit always has been.
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Photo by Pixabay: https://www.pexels.com/photo/smoke-stacks-against-blue-sky-257775/
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