INSURANCE SECTOR TO FEEL IMPACTS OF MANDATORY CLIMATE DISCLOSURE
Recent legislative changes have made climate disclosure mandatory in Australia. The impacts will be wide-ranging, and businesses are being encouraged to prepare for the likely impacts.
This was just one of the insights shared during an address to members of the Underwriting Agencies Council about the impact of Australia’s mandatory climate disclosure requirements.
Earlier this year, the Australian Government passed amendments to the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), resulting in mandatory climate reporting for larger businesses in Australia.
Prateek Vijayvergia, Xceedance Business Leader – Key Accounts, Australia and New Zealand said that while 75% of ASX200 companies were committed to or already performing climate reporting, the number fell to 10.5% for broader ASX companies.
“There's a lot more awareness and commitment and urgency that we see in the Australian market now and this is not limited only to the insurance business, but for all larger Australian businesses,” he said.
“Although this is all good, there is a gap in climate-related reporting among ASX-listed entities, and the depth and the quantification.”
Joining Prateek in the discussion was Sharanjit Paddam, Principal – Climate Analytics at Finity Consulting, who said from 31 December 2025, in addition to an Annual Report, large companies will need to submit a Sustainability Report – what he referred to as “the home for ESG disclosures”.
There are four pillars underpinning the disclosure standards – governance, strategy, risk management, and metrics and targets. And the devil is in the detail.
“You not only have to disclose the financial impacts on your balance sheet today and your income statement today, but also in the short, medium and long-term future,” Sharanjit said.
“They (ASIC and APRA) want hard numbers to be put in the accounts about how climate change is financially going to affect the operations of the company.
“At the heart of the disclosure is really what are the financial impacts of climate change on your company, investors, customers and shareholders; to understand that and to allocate capital and make investment decisions informed by how climate change might affect your business.”
And, importantly, how your company affects climate change. Because if Australia is to achieve the government’s target of broadly halving emissions by 2030, and net zero by 2050, the new legislative requirements are needed, Sharanjit said.
“The world is changing in disclosures in a very big way over the next few years, and companies are going to have to think about not just accounting for their financial outcomes, but also their climate outcomes,” he said.
“These are mandatory standards – this is locked in, and it will be required to happen over the next few years, and it is intended that these standards will change the economy and they will drive changes throughout the way we do business.”
For starters, organisations will need to harness quantitative data to show far more than what is being done within its operations. Scope 3 – emissions indirectly generated by the activities of an organisation – will be the biggest source of emissions required to report on.
It's also the most challenging due to lack of data, methodology and resources.
“What’s really helping all of us is the advancement in technology so there are better ways of collecting information and data around emissions,” Prateek said.
“And also, to then slice and dice that information so it can be used to make a plan around climate risk.
“It's becoming more comprehensive and almost integral to the overall reporting that that's happening for an organisation.”
Organisations impacted by these legislative changes include those that produce accounts under the Corporations Act and that meet any two of the following criteria: consolidated assets more than $25m; consolidated revenue more than $50m; or with100 or more employees. The Largest entities with a 31 December reporting date will be required to report by 31 December 2025, and entities with other reporting dates in 2026.
Sharanjit said “the net is quite wide” and would capture some of the larger underwriting agencies and brokers. In closing, he offered the following advice to such businesses:
“It's an opportunity to look at the services that you are providing and how good a partner you are for your insurance provider, or as a distributor of insurance products, to see where you could uplift your services in this respect,” he said.
“The things we insure, the things we invest in, are all intended to change as a result of these disclosures and getting your heads around that quicker and faster than your competition is very important.”
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Deb Eccleston, Xceedance Communications Consultant
P: 0422 407 788 E: deb@unicorn-content.com.au
