ASIC seeking feedback on its proposed guidance for the new sustainability reporting regime

7 November 2024

ASIC has today released draft Regulatory Guide 000 Sustainability reporting (Draft RG 000) and ASIC Consultation Paper 380 (CP 380) seeking stakeholder feedback on the Draft RG 000 itself, 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.

Feedback on CP 380 is due by 19 December 2024.

Background

In September 2024, the Australian government introduced sustainability reporting requirements into the Corporations Act 2001 (Cth) (Corporations Act) through the enactment of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Cth) (FMI Act).

The objective of the sustainability reporting regime is to improve the quality, consistency and comparability of climate-related financial disclosures of reporting entities. Practically, this means that reporting entities will be required to prepare sustainability reports and keep sustainability records if they:

• are required to prepare an annual financial report under Ch 2M of the Corporations Act; and
• meet one of the sustainability reporting thresholds under s292A

Phased implementation of reporting requirements

The mandatory climate reporting requirements will be rolled out over the next three years, targeting three distinct groups of reporting entities. The first group will be required to prepare annual sustainability reports for financial years starting on or after 1 January 2025. The second and third groups will follow, with reporting obligations commencing on or after 1 July 2026 and 1 July 2027, respectively.

Transition and enforcement approach

Recognising the transition period required for entities to build their reporting capabilities, ASIC has committed to a proportionate and pragmatic approach to supervision and enforcement during this phase. Reporting entities are urged to prepare for the new climate disclosure regime, with feedback on CP 380 due by 19 December 2024.

As the deadline approaches, it is crucial for businesses to stay informed and proactive in adapting to these new reporting obligations, ensuring compliance and contributing to a more sustainable future.

What does the Draft RG 000 address?

The 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.’

What happens next?

ASIC is actively seeking feedback from industry stakeholders through CP 380. This consultation process invites input on the Draft RG 000 and explores whether existing ASIC legislative instruments that provide relief in financial reporting or audit requirements should be extended to sustainability reporting. Stakeholders are encouraged to engage with the draft guidance to help shape the effective implementation of the sustainability reporting regime.

Submissions and responses to CP 380 are due on 19 December 2024.

The final regulatory guide will then be released in Q1 of 2025.

Need any help?

If you would like assistance in understanding your obligations under this new reporting regime or in putting together a submission in response to the matters set out in CP 380, please get in touch with us!