ACSI submission on Treasury’s proposed climate-related transition planning guidance.
Investor use of transition plans
Company transition plans support investors’ capacity to respond to the climate-related financial risks and opportunities expected to impact the value of their investments over the long-term. For superannuation funds, this also supports their duty to act in the best financial interest of their members.
Transition plans provide insights that inform investment decisions. They also help asset owners identify systemic climate risks and opportunities across sectors and portfolios.
ACSI and its members use transition plans to engage directly with portfolio company boards and executives, to promote effective management of climate risks and opportunities. Transition plans also guide voting decisions by providing information on whether companies are appropriately addressing climate-related risks in support of long-term investment returns.
Summary position
ACSI supports Treasury’s development of transition planning guidance aimed at helping organisations manage climate risks and opportunities while strengthening financial market resilience. The proposed guidance appropriately targets transition plan preparers.
We support Treasury’s endorsement of the International Financial Reporting Standards Foundation’s Transition Planning Taskforce Disclosure Framework (IFRS TPT Disclosure Framework). Incorporating this framework into the guidance would promote the quality and comparability of transition plan disclosures by Australian entities.
Our submission includes recommendations to strengthen the proposed guidance by:
- Expanding and refining content on the policy context, including to highlight and explain interaction across the significant domestic climate policy developments that have been recently announced.
- Emphasising the commercial rationale for transition planning, as opposed to being a compliance or marketing-driven exercise.
- Further acknowledging the need to engage with uncertainty, and highlighting supportive positions from regulators, legal experts and transition plan users.
- Refocusing sections on broader environmental and social considerations to concentrate on how these factors contribute to the delivery of transition plan objectives.
- Highlighting potential links between transition planning and modern slavery risks.
ACSI notes that individual entities may face limits in reducing emissions where policy signals are underdeveloped or inconsistent. Therefore, the guidance should be complemented by robust and coordinated policy frameworks that provides clear financial incentives for decarbonisation.
Please refer to the attached document for detailed responses to a selection of the consultation questions.
