A bill giving the Australian Accounting Standards Board power to set climate-related and other sustainability standards for financial reporting was passed in the House of Representatives and introduced into the Senate last week. Treasury Laws Amendment (2023 Measures No.1) Bill 2023 is designed to align Australian reporting standards with international developments, particularly standards being developed by the International Sustainability Standards Board. In 2021, the International Financial Reporting Standards Foundation established the ISSB, giving it the task of developing global standards for sustainability disclosures. The ISSB, in turn, is building on the work of groups such as the Task Force on Climate-Related Financial Disclosures. In February, the ISSB announced it would issue its first set of standards in the June quarter. The bill also allows the AASB to formulate a sustainability standard based on standards developed by other bodies. Such bodies are not named in the bill’s explanatory memorandum and would need to be specified by regulation. The bill gives the AASB power to modify an international sustainability standard if necessary to accommodate Australian law or in consideration of “the Australian institutional environment”. In addition to giving the AASB power to make sustainability standards, the bill gives the Auditing and Assurance Standards Board power to make auditing and assurance standards and it gives the Financial Reporting Council oversight of the process.  The ISSB’s standards will cover governance, strategy, risk management and metrics and targets. Governance disclosures are designed to allow investors and other stakeholders to understand the procedures and controls used to monitor and manage significant sustainability-related risks and opportunities. Disclosures on strategy would allow stakeholders to understanding how an entity is addressing sustainability-related risks and opportunities.  Risk management disclosures are designed to help understand an entity’s sustainability-related risk management processes and whether those processes are integrated into overall risk management processes. Metrics and targets disclosure standards are designed to show stakeholders how an entity measures, monitors and manages sustainability-related risks and opportunities. There is some uncertainty about the passage of the bill through the Senate. It contains a number of measures, including a ban on franking dividends that are funded by capital raisings. This measure has come under heavy criticism from the Coalition and was opposed by some independents in the House of Representatives.