ASIC guidance for new mandatory sustainability reporting
ASIC guidance for new mandatory sustainability reporting
Amendments to the Corporations Act 2001, which received Royal Assent on 17 September 2024, make sustainability reporting mandatory in Australia from 1 January 2025. The Australian Securities and Investments Commission (ASIC) is responsible for administering these requirements, and also for monitoring compliance.
In light of this, ASIC is urging businesses to prepare for climate reporting now. Large businesses and financial institutions (Group 1 entities) should ensure they implement appropriate governance arrangements and sustainability record-keeping processes before the 1 January 2025 start date to be ready for their first sustainability report for the year ending 31 December 2025 or 30 June 2026. Group 2 and Group 3 entities should also begin preparing now for the new climate disclosure regime.
ASIC recognises there will be a transition period as organisations develop the capabilities required to comply. As such, it will take a proportional and pragmatic approach to supervision and enforcement while entities adjust to these new requirements.
Sustainability resources
To assist businesses in navigating these new sustainability reporting requirements, ASIC has published a dedicated sustainability reporting page on its website. The resources cover:
- Who must prepare a sustainability report?
- Contents of the sustainability report
- How and when to lodge the sustainability report?
- Relief from sustainability reporting requirements
- Modified liability settings
- ASIC’s administration of the sustainability reporting regime
- Audit and assurance of sustainability reports
- Further regulatory resources
- Background to the historical development of climate-related financial disclosures.
Relief from sustainability reporting requirements
The resources above explain how entities can seek relief from the sustainability reporting requirements. Sections 340 to 342 of the Corporations Act 2001 allow ASIC to provide relief from some or all of the sustainability reporting requirements. Entities wishing to seek relief may apply to ASIC, but relief is not automatic. ASIC will consider all relevant circumstances in the application and will only grant relief if they are satisfied that complying with the relevant obligations would:
- Make the sustainability report misleading
- Be inappropriate in the circumstances, or
- Impose unreasonable burdens.
Applications for relief must be made in writing and authorised by a resolution of the directors. Entities can apply for relief through the ASIC Regulatory Portal.
Modified liability settings
ASIC's sustainability resources also explain the modified liability settings, which cease for financial years ending after 31 December 2028. Modified liability settings mean that parties cannot bring legal action against the company in relation to ‘protected statements’ made within a sustainability report or the auditor’s report.
Note that the modified liability settings do not apply to actions taken by ASIC, or to voluntary statements made outside of sustainability reports or auditors’ reports, such as statements made in advertising material.
What are protected statements?
Protected statements, and the modified liability periods during which no legal action can be brought in relation to protected statements, are as follows:
|
Type of protected statement |
Modified liability period |
|
Information about Scope 3 greenhouse gas emissions (including financed emissions) |
Financial years commencing between 1 January 2025 and 31 December 2027 |
|
Scenario analysis |
|
|
Transition plans |
|
|
Forward-looking statements |
Financial year commencing between 1 January 2025 and 31 December 2025 |
More information
You can find more information about mandatory sustainability reporting in our previous article 'Mandatory sustainability reporting in Australia: Your questions answered'. In particular, our decision tree will help you identify which entities in your group need to prepare mandatory sustainability reports in their annual reports, and when.
Feeling overwhelmed by sustainability reporting? Let us help
Understanding how the new sustainability reporting legislation applies to your organisation can feel overwhelming, especially when determining which entities must report and by when. Our expert sustainability reporting team is here to simplify the complexity and ensure your organisation meets all requirements seamlessly.