Sustainability
- ASIC has released a short report (linked below) detailing the 35 interventions it has made in response to its greenwashing surveillance activities from 1 July 2022 to 31 March 2023. This demonstrates the heightened focus of ASIC to combat misleading disclosures in respect of greenwashing:
Click here to view the ASIC report. - In a speech by ASIC Chair Joe Longo at the Committee for Economic Development of Australia (CEDA) State of the Nation conference, 13 June 2023, Mr. Longo stated that environmental, social, and governance (ESG) issues are driving the biggest changes to financial reporting and disclosure standards in a generation and the need for companies and investors to prepare appropriately.
Mr Longo noted that ASIC continues to engage with key stakeholders, emphasising the importance of sustainable finance as a strategic priority for the regulator. It was noted that ASIC is engaging with both domestic stakeholders and international regulators as part of its membership of the global sustainable finance taskforce facilitated by the International Organisation of Securities Commissions.
Click here to view Mr Longo’s speech on ESG - On 20 May 2023, Australia and the United States agreed to cooperate on critical minerals and the clean energy transition through a Climate, Critical Minerals and Clean Energy Transformation Compact.As a result of this, Australian companies may gain access to subsidies worth billions of dollars for technologies that underpin the energy transition under the US Inflation Reduction Act and could have a transformative effect on Australian industry.
Click here to read the Joint Statement from the Prime Minister and President of USA. - The European Union is bringing sustainability reporting in line with financial reporting, with the introduction of the Corporate Sustainability Reporting Directive (CSRD). The new rules, which large companies need to follow, will see more organisations provide more detailed reporting on sustainability issues in a strategy to strengthen sustainable investment.In the article (linked below), The Carbon Trust delves deeper into who needs to comply, how you can prepare and the benefits for your business.
Click here to view the article posted by The Carbon Trust - The International Sustainability Standards Board (ISSB) on 27 June 2023 has issued its inaugural standards—IFRS S1 and IFRS S2 —ushering in a new era of sustainability-related disclosures in capital markets worldwide. This consists of 2 parts: (i) General Sustainability Disclosure Standards and (ii) Climate-related Disclosure Standards.
Click here to read about IFRS’s latest standards on sustainability.
Risk
- The Human Technology Institute (HTI) at the University of Technology Sydney (UTS) releases a landmark report on the State of AI Governance in Australia.Importantly, the report maps (i) the duties of company directors related to the use of AI and (ii) the Legal obligations for Australian organisations using AI.
Click here to view UTS’s landmark report on the state of AI governance in Australia. - The below journal article highlights the intersecting obligations of an AFS Licensee in relation to the management of information. It provides a useful strategy for the management of information, divided into four distinct phases: collect, secure, retain and destroy.
Click here to read the article published by the Australian Journal of Financial Planning. - The US Department of Treasury has published the world’s first illicit risk assessment on decentralized finance. The report revealed that certain actors misused DeFi services for money laundering purposes. The US Treasury has called for stronger regulation, guidance, and measures to address the risks of DeFi and to safeguard it from misuse:
Click here to read about the US Department of Treasury’s assessment on decentralized finance.
Compliance
- The SEC’s Division of Examinations has issued a risk alert based on their observation of examinations conducted on newly registered advisers. This risk alert provides advisers with guidance in 3 key examination areas: compliance policies and procedures, disclosures and marketing practices. The objective of this risk alert is to prepare newly registered advisers for SEC scrutiny.
Click here to read about SEC’s risk alert. - Australians who have had personal information exposed in cyber hacks and data breaches will be able to complain to a new Privacy Commissioner, who will investigate serious privacy breaches and ensure government agencies and large organisations are complying with relevant laws when handling personal information. The Privacy Commissioner can seek penalties of up to $50m for the most serious infringements (a significant increase following several recent high-profile breaches).
Click here to read about Australia’s newly appointed Privacy Commissioner. - AUSTRAC has released updated guidance on conducting employee due diligence and AML/CTF training (i) employee due diligence (EDD) and (ii) AML/CTF risk awareness training.
Click here to read about AUSTRAC’s updated guidance on the topics above. - Treasury has released exposure draft legislation to overhaul the thin capitalisation rules for non-financial entities to align with OECD earnings-based model.
At a glance:- 30% of tax EBITDA
- Group ratio test
- Third party debt test.
- Separate transfer pricing analysis required for debt quantum prior to applying ratio based tests.
- New debt creation rules introduced that potentially have broad application.
- Changes to section 25-90 deferred.
- Application date of public Country-by-Country Reporting proposed to be deferred, with a reduction in disclosures required.
Click here to read the Australian Treasury’s exposure draft legislation. - On 14 June 2023, the European Parliament adopted its negotiating position on the Artificial Intelligence (AI) Act. The European Parliament’s vote on the AI Act proposal marks a significant milestone toward the regulation of AI within the European Union. The below article from law firm Cooleyexplores this in more detail.
Click here to read about Cooley’s article on the Europen Parliament’s position on AI. - On 20 April 2023 the Attorney-General announced public consultation on proposed reforms of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. Importantly, this would expand the scope of the legislative scheme to include certain high-risk professions, including lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones.
Click here to read the Attorney General department’s proposed reforms on the AML/CTF regime.
TMC updates
The TMC family is growing! Hritwik Singh (aka “Ricky”)has joined TMC after graduating from a Bachelor of Commerce (Professional Accounting and Finance), The University of Sydney.
Our Principal, Dominic Tayco,was honoured to present to the following organisations on Sustainable Finance this month:
- Australian Prudential Regulation Authority (APRA).
- Delegates from the Vietnamese Electricity Commission and GIZ, the German development agency.
Dom has recently been appointed as a Teaching Fellow ofthe College of Law and a course convenor of the inaugural “Masters of Sustainability” offered by the College of Law.
TMC recently attended the PRI Stewardship Forum, which was hosted by Ernst & Young in Melbourne, Victoria.
