The regime, which commenced earlier this year, mandates that certain large businesses prepare and lodge a sustainability report under the Corporations Act. These reports must include climate-related financial disclosures aligned with the Australian Sustainability Reporting Standards, covering governance, strategy, risk management and greenhouse gas emissions.
ASIC’s guide offers practical direction for companies, superannuation entities, retail corporate collective investment vehicles and other reporting entities. It outlines:
- Who is required to report, and when
- What must be included in a sustainability report
- How climate-related financial information should be disclosed outside of the sustainability report, such as in product disclosure statements
- How ASIC will administer the new regime, including its enforcement powers and approach to audit relief
The new obligations are being phased in over several years, based on entity size. Entities must report if they are already required to prepare an annual financial report under Chapter 2M of the Corporations Act and meet one of the sustainability reporting thresholds, which are based on consolidated revenue, asset value, number of employees, or registration under the National Greenhouse and Energy Reporting Act.
- Group 1 (from January 2025): Large entities with at least $500 million in revenue, $1 billion in assets or 500 employees.
- Group 2 (from July 2026): Mid-sized entities with at least $200 million in revenue, $500 million in assets or 250 employees.
- Group 3 (from July 2027): Smaller entities with at least $50 million in revenue, $25 million in assets or 100 employees.
The regulator has indicated a pragmatic, phased approach to enforcement as businesses build capability – but entities are expected to take their obligations seriously from day one. Directors will be personally accountable for the content of sustainability reports.
While the reporting obligations apply directly to large entities, the effects will be felt across entire supply chains. Reporting entities may now request sustainability data from the small businesses, service providers, and primary producers they work with, requiring organisations of all sizes to understand and engage with sustainability reporting.
To support this broader shift, leading sustainability benchmarking, certification and advisory group EarthCheck partnered with international law firm K&L Gates earlier this year to publish a briefing paper: Australia’s Climate-Related Financial Disclosure Regime.
The paper outlines key thresholds, disclosure requirements and recommended actions, and highlights the need for credible, science-backed reporting across industries.
“Sustainability reporting is now a core part of doing business,” says EarthCheck Founder and CEO Stewart Moore. “This new regime reinforces the need for transparent practices, robust data and board-level accountability.”
Moore welcomes the release of ASIC’s regulatory guide, describing it as “a critical piece of the puzzle for Australian businesses navigating this new landscape.
“Clarity from the regulator will help organisations move forward with greater confidence – but it also reinforces the importance of getting the fundamentals right.”
EarthCheck’s Chief Sustainability Officer, Dr Steve Newman, agrees.
“Now is the time for businesses to act,” he says. “Even if you’re not required to report directly, you may still need to provide data to support the larger entities you work with. Begin collecting that data now, align with recognised reporting frameworks, and be ready to play your part in the broader supply chain.”
With the recent re-election of the Albanese Government and its overwhelming parliamentary majority, there is a stable political environment supporting continued reform. The Government’s strengthened mandate is expected to pave the way for bolder, more ambitious sustainability policies.
EarthCheck will continue working with K&L Gates to monitor policy developments in the months ahead.
Organisations looking to understand and respond to the new regulatory landscape are encouraged to download the briefing paper and explore EarthCheck’s ESG advisory services.
