2 May 2025

Final guidelines for sustainability reporting


GILES RAFFERTY, Media and Corporate Communications


ASIC has finalised its guidance for the mandatory climate reporting that came into force in Australia on the 1st of January this year. Regulatory Guide 280 – Sustainability reporting  was published on 31st of March following an extensive public consultation that included 60 submissions since the draft guidance was released on 7 November 2024.

The new sustainability reporting regime requires listed and private companies, alongside financial institutions operating in Australia to disclose information about their climate-related risks and opportunities in a ‘Sustainability Report’. The disclosure requirements are being introduced on a phased basis. From 1 January 2025 only the largest entities are required to report, followed by mid-tier entities from 1 July 2026 and smaller entities from 1 July 2027, (see Table 1 below).


RequirementGroup 1
First annual
reporting periods
starting on or
after 1 Jan 2025
Group 2
First annual
reporting periods
starting on or
after 1 Jul 2026
Group 3
First annual
reporting periods
starting on or
after 1 Jul 2027
Entities meeting
at least two
of three criteria
Consolidated revenue:
$500 million or more
Consolidated revenue:
$200 million or more
Consolidated revenue:
$50 million or more
EOFY consolidated
gross assets:
$1 billion or more
EOFY consolidated
gross assets:
$500 million or more
EOFY consolidated
gross assets:
$25 million or more
EOFY Employees:
500 or more
EOFY Employees:
250 or more
EOFY Employees:
100 or more

Table 1: Thresholds and timing for Mandatory climate-related financial disclosures


Enforcement

The final guidelines include an update on ASIC’s approach to supervision and enforcement of the new sustainability reporting requirements, which it says will be ‘pragmatic and proportionate’. As the market transitions to sustainability reporting ASIC plans to engage directly with reporting entities to get clarity on the basis for disclosures it believes to be incorrect, incomplete or misleading.  If ASIC remains concerned the next step would be to use its directions powers to give entities the opportunity to make changes to address or prevent compliance failures. ASIC will look to enforcement investigations in cases where it sees misconduct it believes to be of a serious or reckless in nature, or where a reporting entity has failed to prepare a sustainability report.


‘Climate-related financial information that is consistent, comparable and of high quality, facilitates confident and informed decision making by investors and other users of that information.’ ASIC Commissioner Kate O’Rourke


Key Updates

Climate scenario analysis: Reporting entities must use climate-related scenario analysis to assess their capacity to adjust to climate-related changes, developments and uncertainties. The objective is for entities to model for lower warming scenario of 1.5⁰C and higher warming that exceeds 2⁰C.

Scope 3 emissions: In recognition that methods for measuring scope 3 GHG emissions are still being developed ASIC permits the use of estimates when measuring these emissions, e.g. the use of industry averages. ASIC does note the availability of quality scope 3 emissions data is expected to improve over time, which should reduce reporting entities’ reliance on estimates,

Directors’ duties and declarations: ASIC updated guidance is not intended to impose new obligations on directors but rather provide a guide for how existing obligations apply to the sustainability reporting requirements. ASIC guidance does highlight a Director’s duty to be sufficiently climate literate to assess and manage climate risks and opportunities under the sustainability reporting regime but concedes that Directors may need to build this climate literacy over time.

Conclusion

ASIC has indicated that, as the sustainability reporting requirements are rolled out, it will continue to issue guidance aimed at improving understanding of:

    • the core concepts underpinning the requirements
    • statements of no material climate-related financial risks and opportunities under s296B (1).
    • the application of ASICs approach to sustainability reporting relief; and
    • an annual review of sustainability reporting practices.

FIRST Advisers has been advising our clients on best practice Sustainability reporting for a number of years and are well placed to assist with compliance with Australia’s new mandatory climate reporting regime. We have identified gathering Scope 1, 2 and particularly scope 3 carbon emissions have the potential to be challenging, so are partnering with Netnada to address this. We can now offer clients access to actionable tools and insights to help them with measuring and reducing their carbon footprint. Contact us for further information on admin@firstadvisers.com.au.


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