ASIC publishes final sustainability reporting guidance for companies

On 31 March 2025, the Australian Securities and Investments Commission (ASIC) issued its final regulatory guide on sustainability reporting to help companies navigate new mandatory climate reporting requirements.

What does the final guidance mean for mandatory climate reporting?

ASIC is responsible for administering and enforcing the new sustainability reporting requirements – introduced by the federal government in September 2024 – namely a climate statement, accompanied by a directors’ declaration.

Following an extensive public consultation, which the AICD has been closely engaged with, ASIC has released its final Regulatory Guide 280: Sustainability Reporting to assist organisations comply with these new reporting requirements.

The final guidance offers valuable insight into how ASIC will interpret and enforce the climate reporting framework. It clarifies directors’ responsibilities including the application of existing duties, provides examples of forward-looking climate information, and explains how modified liability settings will apply to statements reproduced or summarised in other corporate reports (e.g. OFR).

However, the guidance lacks detailed examples and clarity on some key areas – like report preparation and materiality assessments – which stakeholders including the AICD called for during consultation. ASIC has explained that the guidance is intended to remain general and broadly applicable to all reporting entities, rather than overly detailed. The AICD encourages directors to obtain expert advice to support compliance with the new regime and appropriate application to their entities.

In the final guidance, ASIC has reiterated that it will take a proportionate and pragmatic approach to supervision and enforcement. In response to feedback from the AICD and others, ASIC clarified that it will engage directly with entities where disclosures appear incorrect, incomplete or misleading. If concerns remain, ASIC may provide entities with the opportunity to make changes or otherwise direct changes to be made utilising its directions power. Enforcement action is more likely in cases of serious or reckless misconduct, or a failure to prepare a sustainability report.

What key guidance should directors be across?

Key guidance of relevance for directors includes:

• Directors’ duties: ASIC has provided general guidance for directors including that directors should:
  • Understand the reporting entity’s sustainability reporting obligations, including climate-related risks or opportunities that could be reasonably expected to affect the company’s prospects;
  • Require that the company establishes systems that identify, assess and monitor any material financial risks and opportunities relating to climate (including any changes);
  • Establish controls, policies and procedures for overseeing, managing and preparing the sustainability report (e.g. identifying relevant business units and employees responsible) and for keeping sustainability records; and
  • Apply a critical lens to disclosures in the sustainability report, such as questioning the methodologies, inputs and assumptions used to support disclosures.
• Modified liability regime: The guidance clarifies the scope of modified liability settings, including what statements are considered protected statements.
  • Importantly, ASIC has clarified that protected statements required to be included in the OFR under s299A of the Corporations Act 2001 (Cth) (the Act) (i.e. information that shareholders reasonably require to make an informed assessment of the entity’s operations, financial position, business strategies and prospects for future financial years) are covered by the modified liability setting.
  • Disclosures outside the sustainability report or auditor’s report are only protected if they replicate the protected statement included in the sustainability report or auditor’s report. Summarised or expanded statements are not. Responses to investor questions at an AGM that relate to information in the sustainability report would not be covered.
  • Statements included in the sustainability report by cross-reference to another report are not protected by modified liability settings, nor are statements made voluntarily (e.g. where a protected statement is included in an investor presentation).
• Relief applications: ASIC has a discretionary power to grant relief from sustainability reporting requirements and will assess applications on a case-by-case basis in line with principles outlined in the guidance. While it does not plan to issue detailed guidance at this stage, ASIC may publish information on significant relief applications and expects longer decision timeframes in the initial years.
• Further guidance: As recommended in AICD’s submission, ASIC has provided further guidance on scenario analysis and scope 3 emissions. Of note:
  • Scenario analysis: Entities must use a minimum of two climate scenarios using an approach commensurate with the entity’s circumstances. In addition to a 1.5°C scenario, any second climate scenario that is based on an increase less than 2.5°C would risk non-compliance.
  • Scope 3 emissions: ASIC has included further guidance on how entities are permitted to use estimations in measuring their scope 3 emissions, acknowledging the challenges entities face in reporting these emissions, including financed emissions. Entities may use primary data (data provided by entities in the value chain), secondary data (third party data), or a combination of both, with the expectation that accuracy will improve as data quality and availability increase over time. Scope 3 emissions are not required to be reported on until the second reporting year onwards and are subject to modified liability settings for three years.
• Reporting thresholds and change in circumstances:
  • The guidance does not provide further detail on threshold boundaries, noting that the sustainability reporting requirements crystallise at the end of the financial year. Entities are advised to establish adequate systems to assess whether they may be required to prepare a sustainability report, even if they do not meet the reporting thresholds at the commencement of that year.

What is the AICD doing to support directors with mandatory climate reporting?

• Practice resources:
  • In October 2024, the AICD, as host of the Climate Governance Initiative (CGI) Australia and in collaboration with Deloitte and MinterEllison, released Version 2 of a Director’s Guide to Mandatory Climate Reporting to assist directors in preparing for this ‘generational change’ in corporate reporting. The report features a supportive foreword from ASIC Chair, Joe Longo.
  • On 16 August 2024, the AICD in collaboration with the Insurance Council of Australia and Herbert Smith Freehills released a resource on climate-target setting(while the ASRS do not require organisations to have climate targets, they require disclosure of certain information where such targets exist).
  • On 20 March 2025, the AICD in collaboration with the national science agency CSIRO, developed a climate science snapshot to provide directors with the latest climate science to support informed boardroom discussions on scenario analysis, risk management, and transition planning.
  • The AICD will also release a transition planning resource for directors in the coming months.
• Webinars:
  • Climate reporting has also featured in a number of webinars – watch the latest (June 2024) webinar hereand AICD article summarising the climate reporting legislation.
  • A webinar on circular economy principles is scheduled for June 2025, exploring the opportunities for boards to drive innovation, boost productivity and uncover new sources of value.
• Education: Mandatory climate reporting is featured in the AICD’s climate short-course, and is briefly covered in the free climate eLearning course.