Compulsory climate risk reporting will be phased in this year, starting with big companies and financial institutions.
Draft laws released by Treasurer Jim Chalmers on Friday requiring companies to disclose climate-related risks change the landscape for Australian investors, banks and corporations by elevating climate reporting to the same level as traditional financial disclosures.
The mandatory climate risk disclosure is slated to cover large companies from 2024-25 as the first step in a proposed federal reporting regime that will cover around 20,000 organisations.
Dr Chalmers said the "significant reforms" will help Australia maximise the economic opportunities of cleaner, cheaper and more reliable energy and manage climate change risks.
"Our changes will establish Australia's climate risk disclosure framework, giving investors and companies the transparency, clarity and certainty they need to invest in new opportunities as part of the net zero transformation," he said.
The draft legislation confirms the introduction of standardised, internationally aligned reporting requirements for businesses, many of which already follow voluntary disclosure standards.
"This is an important step for improving transparency and will help investors and companies make more informed investment decisions and lay the foundation for a stronger, more robust financial system," Dr Chalmers said.
He said the federal government is taking a "balanced approach" with these changes following extensive consultation with industry, investors, academics and regulators.
Community feedback is due by February 9 ahead of introduction of the bill to federal parliament.
