ASIC has today released a draft regulatory guide on the sustainability reporting regime for consultation with stakeholders.
From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual statutory sustainability reports containing climate-related financial disclosures.
The draft Regulatory Guide 000 Sustainability reporting (Draft RG 000) includes guidance on who must prepare a sustainability report, how the regime will interact with existing legal obligations and how ASIC will administer the sustainability reporting requirements. This includes specific guidance on ASIC's approach to granting relief from the regime and use of its new directions power.
Draft RG 000 also addresses specific issues in relation to the contents of the sustainability report and sustainability-related financial disclosures outside the sustainability report.
ASIC Commissioner Kate O'Rourke said: 'Our focus for this regulatory guide is to assist preparers of sustainability reports to comply with their obligations so that users are provided with high-quality, decision-useful, climate-related financial disclosures that comply with the law and the sustainability standards.'
ASIC's Consultation Paper 380 Sustainability reporting (CP 380) seeks stakeholder feedback on the draft guide, 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.
'We want industry to engage with our draft guidance and what we are proposing.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,' Ms O'Rourke said.
'We recognise that there will be a period of transition whilst entities build their capability, as reflected in the phasing in of requirements and modified liability provisions.
'During this transition period, we will take a proportionate and pragmatic approach to supervision and enforcement.'
ASIC is urging all reporting entities to prepare for the new climate disclosure regime. Feedback on CP 380 is due by 19 December 2024.
Background
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Cth) requires mandatory climate reporting for large businesses and financial institutions in Australia through amendments to the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).
The mandatory climate reporting requirements will be phased in over the next three years across three groups of reporting entities, with the first reporting cohort required to prepare annual sustainability reports for financial years commencing on or after 1 January 2025.
The second and third reporting cohorts are required to prepare annual sustainability reports for the financial years commencing on or after 1 July 2026 and 1 July 2027 respectively.
Industry stakeholders can refer to sustainability reporting on the ASIC website for more information.
