Accounting body welcomes new sustainability reporting standards

Chartered Accountants Australia and New Zealand (CA ANZ) has welcomed the introduction of new mandated sustainability and climate reporting standards as a massive boost to investor confidence.

On Tuesday, the Auditing and Assurance Standards Board (AUASB) approved two Australian Standards on Sustainability Assurance (ASSAs) under the Corporations Act 2001, General Requirements for Sustainability Assurance Engagements (ASSA 5000) and Timeline for Audits and Reviews of Information in Sustainability Reports (ASSA 5010).

This comes after research conducted by the professional accounting body in 2024 surveying investor confidence found that close to 80 per cent of investors would feel more certain about sustainability information if it was “mandatorily prepared” and aligned with agreed standards.

“The approval of sustainability assurance standards by the AUASB this week is a watershed moment for sustainability and climate risk assurance in Australia,” Amir Ghandar, CA ANZ Reporting and Assurance Leader, said.

“Voluntary reporting on sustainability issues has sometimes been dismissed as a glossy market exercise, but robust reporting standards and a clear pathway to mandatory assurance moves these critical topics into the domain of investment grade market information.

“Australian investors have increasingly demanded reliable and consistent reporting on climate and sustainability – with dependable assurance key to increasing confidence in the reporting.”

The new standards will compel corporate and professional audit firms to bolster the required resourcing to conduct audits related to climate reporting and sustainability assurance, in addition to existing financial reports.

“There will be demand for talent who have the skills to undertake assurance across the thousands of entities that will come into the mandatory climate-related disclosure regime in the coming five years,” Ghandar said.

“While most of the very large companies captured by the legislation in the next two years have been already working to get ahead of the curve on climate reporting and assurance, there is a sizable cohort of smaller, private businesses reporting from 2027 that will have a much bigger gap to bridge in developing the resourcing, internal capabilities and systems.

“CA ANZ has been closely engaged with the government and the standard setters, and we recognise they’ve listened and offered some transitional reprieve, such as slightly relaxing timelines for reasonable assurance over the transitional period.

The standards have been introduced to apply for reporting periods beginning on or after 1 January 2025. CA ANZ said it already has several educational and resource modules available on offer to help professionals prepare for the new standards, including a sustainability assurance playbook; a sustainability assurance micro course; and an elective module in the CA Program, Sustainability for Accountants.