ASIC’s Green Light: Shaping the Future of ESG Reporting

On 31 March 2025, the Australian Securities and Investments Commission (ASIC) released new Regulatory Guide 280 Sustainability reporting (RG 280), following a public consultation process on its draft regulatory guide on sustainability reporting issued on 7 November 2024.

Recap

In September 2024, the passing of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 amended the Corporations Act by introducing mandatory sustainability reporting requirements.

These requirements will be phased in, starting with certain large entities with financial years commencing on or after 1 January 2025. For financial years commencing on or after 1 July 2027, the new requirements will apply to all entities that are required to lodge a financial report under Chapter 2M of the Corporations Act and meet the threshold tests to be classified a large proprietary company.

Key provisions of RG 280

ASIC describes RG 280 as ‘a critical piece that supports the implementation of these sustainability reporting requirements passed by the Australian Parliament’.

RG 280 provides guidance on:

• who must prepare a sustainability report under the Corporations Act
• the content of the sustainability report
• disclosing sustainability-related financial information outside of the sustainability report (such as in disclosure documents and product disclosure statements)
• ASIC’s administration of the sustainability reporting requirements, including its approach to considering relief from the requirements and use of its new directions power

How RG 280 responds to the public consultation feedback

In response to the feedback received, ASIC has:

• added sections dealing with climate scenario analysis and disclosing scope 3 greenhouse gas emissions
• amended the guidance for directors of reporting entities regarding expectations as to how they can discharge their duties in relation to sustainability reporting
• added more specific guidance on applying the sustainability reporting thresholds, including references to relevant parts of applicable accounting standards, for the purpose of determining, revenue, assets and employee thresholds, and the application of the ‘value of assets’ test to funds management vehicles
• amended its position on labelling of sustainability-related information in sustainability reports, to provide greater flexibility for reporting entities that wish to disclose broader sustainability-related information in their sustainability report (beyond the requirements of the Corporations Act and AASB S2)
• updated guidance on disclosing sustainability-related financial information outside of the sustainability report

However, ASIC has declined to provide the templates, worked examples or detailed application guidance called for by respondents to the public consultation process, and instead has maintained an approach of providing guidance that is general in nature and applicable to all reporting entities, because of the expectation that reporting practices will evolve over time.

It has also declined to provide further detailed guidance at this time on specific scenarios that may give rise to the need for relief, specific criteria that must be met for relief to be granted or precise timeframes for processing applications for relief, but indicated that it intends to publish information about its decisions in significant or novel relief applications in due course, to illustrate the application of its approach to sustainability reporting relief.

ASIC has also provided more information about its ‘proportionate and pragmatic’ approach to supervision and enforcement of the sustainability reporting requirements as they are phased in, including that it will:

• consider how ASIC can support reporting entities through guidance and continue to monitor practices
• engage with reporting entities to understand the basis of disclosures in sustainability reports, where ASIC identifies that a statement in a sustainability report is incorrect or misleading in any way
• more likely commence an enforcement investigation where it sees misconduct of a serious or reckless nature, or where a reporting entity fails to prepare a sustainability report required under the Corporations Act.

ASIC’s approach to respondent requests for specific guidance for the Australian market reflects its concern that such guidance could lead to fragmentation of, or misalignment with, guidance issued by the International Sustainability Standards Board on climate-related financial disclosures.

Who do the mandatory sustainability reporting requirements apply to and when?

Those entities which are required to lodge an annual financial report under Chapter 2M of the Corporations Act 2001 (Cth) must now also prepare and lodge sustainability reports for financial years commencing on or after 1 January 2025 if they meet at least one of the following thresholds:

1. Corporate size threshold: An entity (including any of its controlled entities) is considered to meet the corporate size threshold for a financial year if it satisfies at least two of the following criteria:
   • annual revenue of $500 million or more;
   • total assets valued at $1 billion or more at financial year end; or
   • a workforce consisting of 500 or more employees at financial year end.
2. Emissions threshold: An entity satisfies the emissions threshold if it is a registered corporation that has emissions reporting obligations and meets the threshold under section 13(1)(a) of the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER) (other NGER reporters must commence sustainability reporting from 1 July 2026).

Reporting requirements for registered schemes, registrable superannuation entities and retail corporate collective investment vehicles that satisfy a value asset threshold at end of financial year must commence sustainability reporting from 1 July 2026.

Other entities will be phased in from 2026 and 2027 respectively:

• From 1 July 2026, consolidated entities that meet at least two of three criteria: $200 million or more in revenue, at least 250 employees at end of financial year and $500 million or more in assets at end of financial year, must begin sustainability reporting.
• From 1 July 2027, consolidated entities that meet at least two of three criteria: $50 million or more in revenue, $25 million or more in gross assets at end of financial yearand 100 or more employees at end of financial year, will also be required to report.

Key takeaways

• ASIC’s new Regulatory Guide 280 Sustainability reporting, released on 31 March 2025, provides guidance on how the recently introduced mandatory sustainability reporting regime will be interpreted and enforced by ASIC.
• ASIC has made some changes to its draft regulatory guide released in November 2024 in response to public consultation but maintained its approach of providing guidance that is general in nature, in the expectation that reporting practices will evolve over time, and to avoid misalignment with global standards.
• ASIC has also provided more information about its ‘proportionate and pragmatic’ approach to supervision and enforcement of the sustainability reporting requirements as they are phased in.