Australian Government consultation on climate-related financial disclosure

We refer to the Treasury’s consultation on climate-related financial disclosure, running from 12 December 2022 to 17 February 2023. We welcome the opportunity to contribute an investor’s perspective on the design and implementation of disclosure requirements for climate-related financial risks and opportunities in Australia.

Norges Bank Investment Management (NBIM) is the investment management division of the Norwegian Central Bank and is responsible for investing the Norwegian Government Pension Fund Global. NBIM is a globally diversified investment manager with 12,429 billion Norwegian kroner at year end 2022. Of this total, 24.6 billion AUD is invested in the shares of Australian companies. We are a long-term investor, working to safeguard and build financial wealth for future generations.

As a long-term investor, we need information on companies’ exposure to sustainability risks, how these are managed, and relevant performance metrics. We rely on both information related to the current performance of a company (i.e., how and where it creates value today) and information on drivers of value that may be predictive of its long-term performance. Sustainability information supports investment decisions, risk management processes and ownership activities. As a global investor, with holdings in companies in 70 different countries, we have a clear interest in this information being reported in a consistent and comparable manner across markets. That is why we have supported the establishment of the International Sustainability Standards Board and its mission to develop a comprehensive global baseline of corporate sustainability disclosures.

We encourage regulators and standard-setting bodies to set mandatory requirements for climate-related reporting, and strongly support basing the Australian’s climate reporting regime on the forthcoming ISSB standards. Australia’s alignment with international standards is essential both to retain access to global capital markets and to minimise compliance costs for Australian businesses operating cross-border.

We support the expansion of mandatory disclosure requirements to listed and unlisted entities over time. This is important for creating a level playing field and for accurate reporting of scope 3 emissions, which depend on an entity’s suppliers’ and customers’ scope 1 and 2 emissions. We do, however, recognise the implementation challenges, and therefore support phasing in the requirements over time. To ensure reliability of reported information, at minimum limited assurance could be required for climate disclosures under the forthcoming regime, with reasonable assurance required for scope 1 and 2 emissions. Assurance providers should be subject to independence and quality management standards set by the relevant international standard setters. This will support the consistency, comparability and reliability of sustainability-related information provided to the market and thus enhance its quality.

We thank you for considering our perspective and remain at your disposal should you wish to discuss these matters further.

Yours sincerely,

Carine Smith Ihenacho,
Chief Governance and Compliance Officer

Elisa Cencig,
Senior ESG Policy Adviser