IEEFA Urges Australia to Include Scope 3 Emissions in Mandatory Sustainability Disclosures

IEEFA has submitted recommendations to the Australian Treasury's Sustainable Finance Strategy consultation, calling for mandatory sustainability disclosures that include Scope 3 and influenced emissions, short-term credible transition pathways and a labelling regime for sustainable investment products that is both comprehensive and clear. The submission spans three pillars: transparency improvements, financial system capabilities and government leadership.

IEEFA's submission, signed by Chief Executive Amandine Denis-Ryan, Sustainable Finance Specialist Saurabh Trivedi and Lead Analyst Anne-Louise Knight, urges that a Sustainable Finance Taxonomy be complemented by company-level assessments rather than relying solely on sector-based classifications. The institute calls for transition pathways to focus on short-term, material and credible outcomes rather than long-dated net-zero commitments that lack near-term milestones. A sustainable investment product labelling regime, the submission argues, should set a challenging bar while remaining achievable and clear to retail investors.

On financial system capabilities, IEEFA identifies persistent loopholes that allow companies to engage in greenwashing and calls for ESG ratings to be regulated as financial services — a step that would increase accountability for ratings providers and protect investors relying on third-party assessments. The submission also flags several systemic risks requiring urgent attention: rehabilitation liabilities at mining and fossil fuel sites, bottom-up emissions overshoot in reported data, and underreporting of methane emissions. Greater transparency in key data reporting is identified as a foundational requirement across all these risks.

On government leadership, IEEFA emphasises that sustainable finance must reach household and small business level, not just large corporates and institutional investors. Sovereign green bond issuance by the Australian government is identified as critical to mobilising net-zero capital at scale, while the Clean Energy Finance Corporation is highlighted as a key instrument for catalysing private sustainable finance flows. Australia's approach to sustainable finance taxonomy and disclosure architecture is closely watched by India, which is developing analogous frameworks under SEBI, with BRSR becoming mandatory for 1,000 listed companies from FY2024.

Key figure — 1,000 — top listed Indian companies subject to mandatory BRSR sustainability disclosures from FY2024 under SEBI