Blogs

The regulatory landscape for climate action has evolved significantly in Australia in recent years. Alongside other jurisdictions like the EU, Japan, and the UK, Australia has now legislated mandatory climate disclosures. 

A fair, fast and well-planned transition is required to protect the retirement savings of millions of Australians from climate disruption and damages. Regulated climate disclosures provide the foundation for financially material information to be reported across the economy, helping Australian companies remain attractive in global capital markets. They will also assist regulated superannuation (pension) funds looking to comply with the Australian Prudential Regulatory Authority’s Prudential Practice Guide, CPG 229 Climate Change Financial Risks, which notes that “a prudent institution will consider both the financial opportunities and the financial risks of climate change as it sets its strategy”. 

At a domestic level, consistent and widespread climate disclosure helps investors, regulators, and stakeholders form a comprehensive understanding of the economy’s climate risks and opportunities, fueling investment in companies that are well prepared for the climate transition. Given the global nature of modern commerce, reporting that aligns wherever possible with international standards will streamline disclosure processes for investors and companies that operate in multiple jurisdictions.  

In part, policy progress to date has been driven by active advocacy efforts led by Australia’s most influential peak bodies representing business, finance, and retail and institutional investors, including the Investor Group on Climate Change (IGCC). Investors working with IGCC recognize that advocacy is a key tool in the shaping of changes to policy, regulation and standards that are needed to address and manage systemic climate risks. You can find case study examples of such Australian investors here. 

Australian climate-disclosure standard (AASB S2) – adopting the International Sustainability Standards Board IFRS S1 and S2 – will provide investors and other stakeholders with greater transparency and more comparable information about an entity’s climate-related financial risks and opportunities. Institutional investors, including unlisted asset managers and superannuation (pension) funds, are also required to report against AASB S2. Under AASB S2 it is not mandatory to have a transition plan, but an entity that does have a transition plan must disclose it.  

The implications for climate transition planning in Australia 

In Australia, IGCC’s State of Net Zero survey shows that despite not being mandatory, there has been a steady increase in investors having a climate transition plan – rising from 33% in FY2021 to 61% in FY2024. In FY25 there was a slight decrease, down to 54% of investors disclosing they had a transition plan (or climate action plan). This can be partly explained by investors taking a ‘wait and see’ approach to emerging transition plan guidance from local policymakers.  

Additionally, the mandatory climate reporting regulations require disclosing entities to assess their resilience under a minimum of two scenarios, including a 1.5℃ and a higher warming scenario that ‘well exceeds’ 2℃. IGCC’s State of Net Zero Report 2025 found that 78% of Australian investors surveyed at the end of 2024 had conducted scenario analysis on either the whole or part of their portfolio for at least two temperature scenarios.  

Australian investors must now work to translate this analysis into transition planning processes and develop a strategy to deliver on their climate goals and manage the risks associated with the transition. Bridging the analytical insights drawn from the scenario analysis with operational implementation will involve embedding these insights into daily investment processes, engagement strategies, as well as governance structures.  

That’s where IGCC and the Founding Partners of The Investor Agenda come into play.  

The Investor Agenda & Investor Climate Action Plans (ICAPs)  

The Investor Agenda is a global forum of organizations made up of seven investor networks supporting investor and government actions towards the goals of the Paris Agreement, including reaching a net zero emissions economy. The Founding Partners – AIGCC, CDP, Ceres, IGCC, IIGCC, PRI and UNEP FI – developed the Investor Climate Action Plans (ICAPs) Ladder and Guidance to provide investors with clear standards to assist in issuing and implementing comprehensive climate action plans.  

For investors in Australia who are just starting out on their transition plan journey, the 2024 ICAPs Guidance highlights emerging practices in developing and publishing climate action plans. It also helps investors self-assess which tier they are on along the ICAPs Expectations Ladder, understand the main actions they can take to strengthen their approach, communicate this information to colleagues, and navigate a growing number of climate-related investor initiatives and reporting expectations.   

As part of the rollout of Australia’s Sustainable Finance Roadmap, the Australian Treasury has been engaging with key stakeholders, including Investor Agenda Founding Partner IGCC, on regulatory guidance for transition planning in 2025. Moreover, IGCC is conducting a series of working group sessions throughout 2025 that will focus on the implementation of transition planning elements that inform investor transition plans. The sessions will also draw on various tools including the ICAPs Ladder and Guidance and the Net Zero Investment Framework (NZIF 2.0).  

If you would like to join IGCC as a member to access the latest news and webinars on these regulations, please email Marwa Curran, Manager, Investor Engagement at IGCC at Marwa.curran@igcc.org.au.