The bill, once passed, will introduce amendments to the Corporations Act 2001, legislating mandatory climate-related financial reporting requirements. The Australian Accounting Standards Board will then finalise the Australian Sustainability Reporting Standards, which prescribe the disclosures required to be prepared by reporting entities.

A growing panic across many sectors is creating a feeding frenzy for lawyers and consultants, but not all advice is equal, and the risk of reputational damage and even litigation for those businesses getting it wrong is very real.

While it starts for big business at the beginning of January, it doesn’t take long to reach into mid-sized business, and Australian Securities and Investments Commission (ASIC) chair Joe Longo said earlier this year that it would ultimately be required of 6,000 entities across Australia.

Over the next few years, most entities with a turnover of over $50 million are expected to report the data, and – like modern slavery reporting – each is expected to include data from supply chains.

A particularly challenging aspect of the new climate reporting requirements will be addressing Scope 3 emissions, which encompass indirect emissions from the entire value chain, including those from suppliers and customers.

To put that in context, supermarket chain Woolworths claims it has over 18,000 suppliers, many of which will need to supply it with data so it can meet the new mandatory requirement from the beginning of next year.

Although some of the detail will only be revealed in an ASIC guidance, which is yet to come, disclosures will likely need to be made in an annual report, with areas from climate governance, strategies, metrics, and targets and include the equivalent for emissions from supply chains. Not surprisingly, despite the long lead-in, many businesses are not ready.

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Where there is business panic, there are always lawyers and consultants to show the way.

Almost overnight, it seems that literally hundreds of new ESG advisers have sprung up, many spruiking technological solutions to the latest compliance nightmare.

From the big four consultants to small ESG specialist businesses, the advice – at a cost – is coming thick and fast.

The ESG sector is increasingly becoming a hotbed of opportunity for consultants, advisory and technology, driven by the surging demand for compliance and sustainability solutions. Meanwhile, investors are keenly eyeing the ESG space as a promising avenue for growth, with many seeing it to align their portfolios with sustainable and ethical practices while potentially reaping financial rewards.

This vibrant and evolving ecosystem not only highlights the commercial potential of ESG but also underscores the importance of having tailored, compliant, high-quality solutions in a market that is rapidly expanding and maturing.

In a recent survey of the market, it was found that over 250 ESG or sustainability software solutions operate in Australia alone and that’s before you get into the vast range of accounting, legal and strategic advice on offer.

A lot of the innovation in this area is coming from Europe, which is further down the track in requiring climate mitigation reporting, but the US, in particular certain states, is also quickly developing this area.

While many of these solutions are being spruiked in Australia, it’s important to note that the Australian standards are not the same, and some “global” solutions might not meet local standards.

Another element is the contrast between pure compliance and strategic advice.

For example, the big four accounting groups are keen to retain their audit and consulting business model by managing both climate disclosure compliance and strategic advice, even though this might create conflict in much the same way as financial audits and business consulting. There is also the question of whether consultants and accountants are best qualified in an area where managing future legal risk is a key element.

Lawyers like myself see ESG as much more than numbers, containing considerable litigation and regulatory risk where the numbers don’t add up and claims are exaggerated.

Greenwashing, where environmental claims don’t meet reality, has long been a reputational risk, but the risk of litigation and, in addition, penalties, with ASIC’s growing number of actions against entities, such as Active Super and Mercer, and the Australian Competition and Consumer Commission (ACCC) prioritising greenwashing claims.

Navigating this will not be easy, and there’s no doubt a role for a range of different advisers, but for those late to the party, the possibility and cost of getting it wrong is significant.

The evolving landscape of mandatory climate reporting also highlights the critical need for businesses to develop robust internal processes and controls. Companies must not only adapt to the new reporting requirements but also ensure their data collection and management systems are precise and reliable.

For many businesses, this will mean a fundamental shift in how they approach their environmental impact. Failure to do so not only risks non-compliance but could also undermine investor confidence and customer trust.

Emma Peters is the director of ESG at Cowell Clarke.