ASIC publishes eight key actions for organisations drafting sustainability reports

The Australian Securities and Investments Commission (ASIC) has highlighted eight action items for reporting entities to consider when preparing sustainability reports following a review.

ASIC reviewed of a sample of 40 sustainability reports at the end of last year and found marked progress in disclosure reporting following the introduction of statutory sustainability reporting requirements compared to disclosures previously made voluntarily but identified opportunities for improvements.

Australia’s statutory sustainability reporting requirements are being phased in over three years across three groups. The first group of reporting entities with financial years ending 31 December 2025 have now lodged their sustainability reports with ASIC.

ASIC commissioner Kate O’Rourke said: “It appears that statutory reporting has not only resulted in heightened transparency, but also more meaningful engagement by entities with climate-related risks and opportunities.

“We saw examples of entities adapting or updating existing governance and risk management processes.”

She added: “We expect improvements over time as more information becomes available and as entities gain more experience. We are supportive of measures that reduce regulatory burden whilst preserving core sustainability reporting requirements and will continue to engage with Treasury on these proposed reforms.”

The eight actions for reporting entities are:

• Explain how information in the sustainability report connects with relevant disclosures in the financial report.
• When disclosing material information about current and anticipated financial effects of climate-related risks and opportunities, carefully consider whether you are also able to disclose quantitative information, rather than only qualitative information and, if not, ensure that users can understand the reasons you provided qualitative information over quantitative.
• When identifying climate-related risks and opportunities, consider past events, current conditions and forecast future conditions, as well as how you may be affected (whether directly or indirectly) by the risks and opportunities across your value chain.
• Provide clear, effective and proximate disclosure of relevant judgements, assumptions and areas of measurement uncertainty, including when identifying climate-related risks and opportunities and calculating the amounts and percentages that must be disclosed under cross-industry metrics.
• When determining whether you have a ‘climate-related target’, remember the definition of ‘climate-related targets’ in AASB S2 extends to targets that you must meet by law or regulation. This includes greenhouse gas emissions targets such as the Safeguard Mechanism.
• Ensure material climate-related financial information is not obscured through the disclosure of additional climate-related information.
• Meet the cross-referencing disclosure requirements, including the requirement that the crossreferenced information is available on the same terms and at the same time as the sustainability report.
• Do not use disclaimers that conflict with the statutory framework and objectives of Chapter 2M sustainability reporting and may confuse or mislead users.