Legal experts have questioned a federal government proposal to put a three-year pause on litigation for deceptive climate claims.

The NSW Bar Association and the Environmental Defenders Office (EDO) have expressed apprehension about the temporary moratorium, which they believe could hinder access to justice and undermine Australia's commitment to reduce emissions to 43 per cent of 2005 levels by 2030.

The proposal is part of a major shift in corporate reporting, set to begin in mid-2024. It will require large Australian firms to detail climate-related risks in their financial disclosures, with smaller companies to follow in subsequent years.

Australia is among several jurisdictions adopting new international sustainability standards for both listed and unlisted corporations to enhance transparency and accountability concerning climate change.

Companies will be obliged to disclose whether they possess a climate transition plan and reveal details about their scope 1, 2, and 3 greenhouse gas emissions. 

These businesses must also outline their resilience to a climate scenario 1.5 degrees Celsius warmer than the pre-industrial era.

The Treasury is developing legislation to implement these standards, affecting approximately 20,000 businesses. 

Some businesses are anxious about potential legal action arising from disclosures on scope 3 emissions, which may constitute a significant portion of their emissions.

Scope 3 emissions are produced outside a company's control, such as gas generated by an energy company and consumed by customers.

Climate-related litigation has surged in Australia over the past three years, with a focus on corporate accountability, greenwashing, and misleading environmental claims. 

Treasury is concerned that companies may become overly cautious about climate disclosures during the standards' introduction, leading to the proposal for a three-year period where only regulators like ASIC could pursue legal action against misleading scope 3 disclosures and forward-looking statements.

NSW Bar Association President Gabrielle Bashir SC believes this moratorium would limit access to justice for individuals who feel deceived by a company's climate claims. 

She argues that even a three-year halt undermines Australia's 2030 emission reduction goal.

EDO's Kirsty Ruddock highlights the need for reliable information for investors to make informed decisions and supports allowing the public to seek justice through injunctions or declarations without imposing damage payments on companies.

Some, like University of Melbourne Sustainable Finance Hub researcher Rebekkah Markey-Towler, emphasise the importance of the new disclosure framework in advancing climate action, although other mechanisms are being introduced.

However, some industries argue that a three-year moratorium is not enough time to adapt. 

The Association of Superannuation Funds has called for at least four years, while major oil and gas company Woodside also seeks an extended moratorium due to challenges with scope 3 emissions, which occur beyond a company's control.

Implementing the new Australian climate standards presents challenges for companies, especially for smaller entities unfamiliar with climate disclosures. 

Some suggest raising the minimum assets value for companies transitioning to the standards to allow them more time to prepare.

A skills gap in climate-literate financial workers is anticipated too, with more demand than supply. This gap may affect the accuracy of climate disclosures and hinder the energy transition's success. 

Consultation on Australia's climate financial disclosure standards is open until March 1, with the federal government expected to release draft legislation by year-end.