Australia’s mandatory climate disclosure regime is less than two years old – and the compliance pressure is already flowing downstream to the repair shops, builders, and trade contractors inside insurer supply networks. Many of those businesses are broker clients.
That dynamic sits at the centre of the Insurance Council of Australia’s (ICA) submission to Treasury, lodged on September 29, 2026, in response to a consultation on improving the efficiency of the climate-related financial disclosure framework.
Australia’s disclosure rollout operates in three stages. Group 1 entities – those with revenue above $500 million, assets above $1 billion, or more than 500 employees – began reporting from January 1, 2025. Group 2 commenced from July 1, 2026. Group 3 follows from July 1, 2027.
Scope 3 emissions, covering indirect emissions across supply chains including repairers, builders, and contracted services, become mandatory from each entity’s second reporting year.
Most small businesses have no direct obligations. But the Australian Securities and Investments Commission (ASIC) has stated publicly that many form part of the supply chains of larger reporting entities – meaning their emissions may be counted as part of a larger company’s Scope 3 disclosures, whether those businesses know it or not.
ASIC published Regulatory Guide 280 on March 31, 2025, to help entities navigate these obligations, including dedicated sections on Scope 3 emissions and climate scenario analysis.
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For insurers, the supply chain is large and fragmented. IAG – parent of NRMA Insurance, CGU, WFI, and ROLLiN’ – conducted more than 108,000 property and motor inspections during FY2024-25, with over 4,800 repair professionals participating in technical training across its national network. That network of panel beaters, builders, and trade contractors sits directly in the path of Scope 3 data requests.
The Insurance Council’s submission was blunt: many suppliers, particularly small and medium-sized businesses within insurance repair and service networks, have limited experience with climate and emissions reporting and may lack the systems, resources, or expertise to respond.
Low response rates to supplier surveys were cited as a recurring obstacle. Data that does arrive often comes in different formats and at varying levels of detail, making consolidation difficult.
Brokers advising clients in trades, construction, motor repair, or property services who work within insurer networks should take note. Data requests from insurers are expected to grow as Scope 3 obligations expand – and some large companies are already inserting climate data requirements into supplier contracts.
The submission provides some of the clearest publicly available data on actual compliance costs inside the Australian insurance sector.
One insurer reported an external audit fee of just under $90,000 for FY26, expected to reach approximately $140,000 in FY27 as the assurance scope widens. Another reported approximately $200,000 in first-year assurance costs alongside around $500,000 in additional third-party advisory fees. A further member said sustainability assurance pushed external audit fees up by approximately 10% to 15% in the first year, excluding internal staff costs.
One insurer received more than 28 separate information requests during FY26 alone, involving multiple internal teams and around six stakeholder interviews of between two and six participants each.
One figure is worth highlighting: a first-year reporter with zero Scope 1 emissions and low Scope 2 emissions still incurred material auditor, expertise, and documentation costs. Compliance burden does not track closely with actual emissions exposure.
Under the current framework, assurance requirements escalate progressively. The end-state, established by the Australian Auditing and Assurance Standards Board (AUASB), requires reasonable assurance over all climate disclosures for financial years commencing on or after July 1, 2030.
The Insurance Council wants that trajectory changed. Its primary position is that limited assurance should remain the permanent mandatory baseline.
The argument rests on cost – and on an absence of demand. Across listed and unlisted members, including foreign-owned subsidiaries, the Insurance Council reported no investor or shareholder requests for reasonable assurance. Some members received no investor questions about climate disclosures at all after releasing end-of-year results.
If a pathway to reasonable assurance is retained, the submission calls for it to be delayed and conditioned on a readiness assessment across methodology maturity, data quality, assurance market capacity, and demonstrated user demand.
One of the more technically significant issues in the submission concerns the classification of emissions generated by insurance claims activity – building repairs, vehicle repairs, reconstruction, restoration services, and replacement goods.
At the time of the submission, Insurance Council members remained divided. Some treated claims-related emissions as part of their operational supply chain under Scope 3 Category 1. Others considered them outside climate disclosure requirements.
That ambiguity has been partially addressed since. In December 2025, the AASB issued AASB S2025-1 – Amendments to Greenhouse Gas Emissions Disclosures – clarifying that insurers are permitted to exclude insurance-associated underwriting emissions from mandatory Scope 3 Category 15 disclosures. The amendment applies to reporting periods beginning on or after January 1, 2027, with early application permitted.
However, the Insurance Council’s own Scope 3 Emissions Industry Guide still allows insurers to classify claims emissions as either Category 1 or Category 11, depending on the calculation approach used. A definitive, binding standard on claims-related emissions does not yet exist.
For brokers in commercial and specialty lines, the distinction matters. How claims emissions are ultimately classified affects insurer cost management, repair network decisions, and supplier contracting – all areas where broker-placed coverage intersects.
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Australia's review is not happening in isolation. New Zealand moved in November 2025 to narrow its own mandatory climate disclosure regime, with changes taking effect from March 31, 2026. The listed company threshold rose from a market capitalisation of NZ$60 million to NZ$1 billion, with the stated aim of reducing compliance burden, according to law firm Anderson Lloyd.
The Insurance Council cited this in its submission, noting the review aligns with trends in comparable markets.
