Australian Listed Entities' Preparedness for Mandatory Reporting and Assurance of Climate-related Disclosures

Australian listed entities face mandatory climate-related reporting and assurance requirements, to be contained in annual reports, for reporting periods from January 2025. Our study assesses the preparedness of listed entities on the Australian Stock Exchange to meet these requirements by examining their disclosures in annual reports between 2018 and 2022. We assess two aspects of preparedness: (1) the disclosure of any climate-related information in annual reports; and (2) the alignment of climate-related disclosures with the mandatory requirements. For a sample of 7,728 entity-year observations, of which 2,349 have climate-related disclosures in their annual reports, we find an overall low, but significantly increasing, level of preparedness among Australian listed entities, with the first group of entities required to make these disclosures demonstrating the highest level of preparedness. We then explore drivers of preparedness and find that entities operating in carbon-intensive industries and exposed to a more stringent regulatory environment demonstrate higher levels of preparedness. In addition to entity characteristics, we find Big 4 auditors are a significant driver for both disclosure and alignment, and auditors' expertise in carbon-intensive industries is positively associated with the alignment aspect of preparedness. Our findings provide timely initial evidence to inform the current regulatory agenda on mandatory climate-related reporting and assurance requirements.