ASIC Unveils New Guide to Sustainability Reporting, Bringing Clarity to Climate Disclosures

Key Takeaways

• New Regulatory Guide: ASIC released RG 280, offering guidance on sustainability reporting for entities required to disclose climate-related financial information under the Corporations Act 2001.
• Phased Implementation: The reporting requirements will be phased in, with the first cohort of entities required to report for financial years starting 1 January 2025.
• Enhanced Guidance Based on Feedback: ASIC’s updated guide incorporates stakeholder feedback, adding sections on climate scenario analysis, Scope 3 emissions, and clearer advice for directors.
• Support and Enforcement: ASIC will support entities through guidance and monitoring but will take enforcement action in cases of misleading or incorrect sustainability reports.
• Relief for Stapled Entities: ASIC allows stapled entities to prepare consolidated sustainability reports for their entire group and will consider other relief applications.

Deep Dive

The Australian Securities and Investments Commission (ASIC) has recently dropped a new set of guidelines that will help companies navigate the complexities of climate-related financial reporting. The release of Regulatory Guide 280 comes after a deep dive into industry feedback and offers a clearer picture of how companies, superannuation funds, and investment vehicles should approach sustainability disclosures under the Corporations Act 2001.

More than ever, investors, stakeholders, and the general public are demanding transparency on how businesses are addressing climate change and environmental risks. ASIC’s guide provides the roadmap for companies that are required to report on climate-related financial matters, ensuring consistency and reliability in the data they provide.

For those still getting up to speed, RG 280 is designed for a wide range of entities, from companies to registered schemes and retail corporate investment vehicles. It lays out the specific requirements for preparing a sustainability report containing climate-related financial information. But the guide is not just a dry list of rules—it also sheds light on some of the trickier aspects of reporting, including what exactly should be disclosed and how to handle climate-related data that might appear outside the formal sustainability report, such as in other documents like product disclosure statements.

One thing that sets this guide apart is its approach to practical enforcement. ASIC is making it clear that while they’re here to help businesses meet the new requirements, they’ll also hold them accountable. Whether through offering relief for unique cases or stepping in when reports are found to be misleading, ASIC’s stance is pragmatic, focused on helping entities get it right, but not shying away from enforcement when needed.

Listening to the Industry

ASIC didn’t just throw this guide together in isolation. They took the time to engage with stakeholders, ranging from companies to law firms, auditors, and even academics, gathering feedback through Consultation Paper 380. A total of 60 submissions poured in, showing broad support for ASIC’s effort to tackle the thorny issue of sustainability reporting.

Here’s where the magic happened: the ASIC actually listened. The final version of RG 280 now includes enhanced sections on things like climate scenario analysis and the inclusion of Scope 3 greenhouse gas emissions, both critical to understanding the full environmental impact of a business. Directors of reporting entities now have clearer guidance on their role, and the reporting thresholds have been fine-tuned for better clarity. The guide also addresses the often-murky issue of how to label sustainability information, ensuring that reports aren’t just filled with jargon but are actually meaningful to investors and stakeholders.

While the new guidelines are a significant step forward, they’re only one part of the puzzle. ASIC’s approach goes beyond merely setting rules—it’s about supporting companies as they work through these changes. The reporting requirements will be phased in over the next few years, with the first group of companies already submiting their reports on 1 January 2025. The regulator’s role here is both to ensure that businesses get the help they need and step in when something goes wrong.

ASIC is making it clear that they don’t want to play the role of the “bad cop” unless it’s absolutely necessary. If a report is found to be misleading, they’ll first engage with the company to understand why and offer them a chance to make changes. Only in cases of serious misconduct or where a report is egregiously incorrect will they turn to enforcement.

Changes for Stapled Entities and the Broader Value Chain

As part of their efforts to make the transition smoother, ASIC has introduced relief provisions for stapled entities, allowing them to prepare a consolidated sustainability report for the entire group. ASIC has also ensured that small businesses and farmers, who might find sustainability reporting a bit intimidating, aren’t left in the dark. More guidance is now available for these groups, making the new rules feel more inclusive.

While small businesses aren't directly required to report, they may still be affected through their relationships with larger businesses. If you’re part of a supply chain, larger companies may ask for climate-related data, such as energy usage, to help them meet their own reporting obligations. This makes it essential for small business owners to stay informed about the changes on the horizon.

This is just the beginning. As the sustainability reporting landscape evolves, ASIC plans to continue refining its approach, issuing more publications and updates to ensure that businesses have the tools they need to report accurately and transparently. ASIC’s goal is to build trust in the data provided, ensuring that stakeholders can confidently rely on the information disclosed.

In her statement, ASIC Commissioner Kate O’Rourke put it perfectly: “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.”

Businesses now have the opportunity to get ahead of the curve, refine their processes, and make sure they’re in line with the new rules. ASIC’s RG 280 is the compass, but it’s up to each company to chart their own course, one that reflects not just regulatory compliance, but also a commitment to sustainable, transparent, and responsible business practices.

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