ASIC seeks feedback on sustainability reporting regime guidelines

The Australian Securities and Investment Commission (ASIC) has today released its draft regulatory guidance for stakeholders of the soon-to-be-introduced sustainability reporting regime.

Following the successful passage of the Treasury Laws Amendment bill through Parliament in August, financial institutions and other large businesses will be required to prepare annual statutory sustainability reports containing climate-related financial disclosures.

These disclosures must comply with relevant sections of the Corporations Act as well as the Australian Accounting Standards Board’s (AASB’s) sustainability standards.

The reporting requirements come into effect from 1 January 2025, but will be phased in over the next three years for the three groups (based on revenue, with the largest entering the scheme first) of reporting entities.

ASIC’s draft Regulatory Guide 000 Sustainability reporting [pdf] provides guidance to regulated entities on:

• who must prepare a sustainability report;
• when reporting entities need to prepare a sustainability report and how to comply with related requirements, such as around keeping sustainability records;
• specific issues in relation to the contents of a sustainability report, such as statements with forward-looking climate information, labelling, the use of cross-referencing, and the proportionality mechanisms and exceptions under AASB S2;
• how the sustainability reporting requirements interact with existing legal and regulatory requirements;
• ASIC’s role in administering and enforcing the sustainability reporting requirements, including its approach in granting relief from these requirements and use of its new directions power.

ASIC’s is seeking stakeholder feedback on the guidance, including whether any ASIC legislative instruments that grant relief in relation to financial reporting or audit requirements should be extended to sustainability reporting, and any other areas where ASIC should support the introduction of the sustainability reporting regime.

Commenting on the release of the guidance, ASIC commissioner Kate O’Rourke said its primary focus “is to assist preparers of sustainability reports to comply with their obligations”, ensuring users are provided with “high-quality, decision-useful, climate-related financial disclosures that comply with the law and the sustainability standards”.

“We want industry to engage with our draft guidance and what we are proposing. Their feedback will help us to ensure that we can effectively support the implementation of the sustainability reporting regime,” O’Rourke said.

She added that the regulator will take a “proportionate and pragmatic approach to supervision and enforcement” as the scheme is phased in.

Feedback on the draft guidance is due by 19 December 2024.