ASIC Sustainability reporting update

ASIC as sustainability
reporting regulator

Mandatory sustainability reporting in Australia marks a significant shift in reporting and auditing practices. ASIC has introduced a quarterly newsletter, Reporting and Audit Update, to help professionals stay informed about regulatory developments under the Corporations Act 2001 (the Act) and AASB S2 Climate-related Disclosures (AASB S2), and other climate-related reporting matters.

Register of sustainability reporting relief decisions

ASIC has released a Sustainability Reporting and Audit Relief Decisions Register, detailing relief it has granted or denied to entities under the Act in relation to sustainability reporting and auditing matters.

The register aims to enhance transparency and provide prospective applicants with insights into the factors considered and conditions imposed when granting relief from preparing a sustainability report under Chapter 2M of the Act.

The register will be updated on a quarterly basis as new decisions are made to grant or refuse relief.

We've outlined some of the sustainability and audit first relief frequently asked questions and answers.

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KPMG reminder

Entities are reminded that they are still required to apply for individual relief from ASIC, even if their fact pattern is identical to the relief already granted.

Three unlisted, wholly owned entities of a Registered Superannuation Entity (RSE) that meet the Group 1 threshold for sustainability reporting.

Not required to prepare standalone sustainability reports for the first financial year in which reporting is required under s292A(1) of the Corporations Act.

The three entities have no material external operations and primarily provide internal support to the RSE group.
Under accounting standards, the RSE must prepare consolidated financial statements, which include these entities.
The RSE meets the threshold for Group 2 reporting and will elect to prepare a consolidated sustainability report under s292A(2) which includes these entities.
The entities' cumulative greenhouse gas emissions account for less than 1% of the group’s total emissions.

ASIC conclusion: Preparing standalone audited sustainability reports for only one year would impose an unreasonable burden.

The financial reports of the entities must include a summary of the relief provided.

One financial year.

ASIC observations on voluntary climate disclosures

ASIC reviewed a small sample of publicly available voluntary climate-related disclosures as entities prepare for the first round of mandatory sustainability reports in accordance with AASB S2 for financial years ending 31 December 2025. ASIC observed that these voluntary climate disclosures were commonly prepared under the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD). AASB S2 is based on the TCFD framework.

Here is a summary of ASIC’s key observations to assist entities as they prepare for mandatory reporting.

Scope 3 emissions are indirect greenhouse gas emissions (GHG) that occur throughout an entities’ value chain, both upstream and downstream. To determine Scope 3 emissions, most large entities, were observed to use a combination of:

Primary data obtained directly from within the entity’s value chain, such as information provided by suppliers and customers.
Secondary data sourced from outside the entity’s value chain, such as industry averages

The use of both of these data sources is permitted by AASB S2.

AASB S2 provides transition relief from entities having to disclose their Scope 3 GHG emissions in their first sustainability report. Regardless of this, entities that have previously disclosed Scope 3 emissions in their voluntary reports may continue to do so.

From its review of the voluntary disclosures, ASIC observed the following:

Disclosures were often repetitive, obscuring essential information on the management of climate-related risks and opportunities.
Scenario analysis disclosures lacked sufficient detail on the underlying assumptions and dependencies relied upon in the analysis.
Where entities disclosed transition plans, these were not always clearly linked to targets, actions, or strategies.

To help stakeholders assess the resilience of an entity’s strategy and business model, AASB S2 requires scenario analysis that considers material climate-related risks and opportunities. It also requires entities to disclose a clear link between their strategies, transition plans, and climate-related targets.

ASIC re-emphasised that as mandatory sustainability reporting is being phased in and entities adjust to the new reporting requirements, ASIC plans to take a pragmatic and proportionate approach to its supervision and enforcement of these requirements.

ASIC Regulatory Guide 280 Sustainability Reporting was published in March 2025 to help entities with preparing a sustainability report and understand how ASIC will exercise its enforcement powers under the law – see our guidance.

Keep greenwashing in mind

ASIC continues to focus and take action against greenwashing in sustainability-related claims, emphasising the importance of accurate and transparent disclosures.

ASIC's surveillance into entities’ sustainability claims highlight key concerns including:

unsubstantiated sustainability strategies
unsupported commitments
inadequate disclosures of environmental and climate-related risks, particularly in high-risk sectors like mining, resources, and consumer staples.

In response, some entities and trustees have been required to amend or remove misleading statements across various disclosures.

Entities making any kind of sustainability-related claim should consider the guidance set out in ASIC Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products.

Entities preparing mandatory sustainability reports should be vigilant and mindful of greenwashing and avoid making false or misleading claims in these reports.

Educational materials

As previously foreshadowed by ASIC, supporting educational materials are now in development and are expected to be released later this calendar year.

These materials will target Group 3 entities required to prepare sustainability reports for financial year commencing on or after 1 July 2027.

Topics like climate-related risks, emissions accounting, scenario analysis and governance and risk management will be covered in the form of E-learning modules which will be supplemented by workshops and roadshows in 2026.

We welcome ASIC’s latest communications, observations and useful insights for entities as they prepare for mandatory sustainability reporting, along with ASIC’s register of discretionary reporting relief granted. As ASIC continues to build this out, it will be another valuable resource to include in an entity’s sustainability reporting implementation toolbox.

Julie Locke

KPMG Australia