Finance regulator ASIC has just released a draft regulatory guide on the sustainability reporting regime for consultation with stakeholders.
From January 1, 2025, many large Australian businesses and financial institutions will need to prepare annual statutory sustainability reports containing climate-related financial disclosures.
According to ASIC documents, entities that meet at least two of the following three criteria will be required to undertake mandatory reporting from January 1: a consolidated revenue of $500 million or more, a consolidated gross assets value of $1 billion or more, and/or at least 500 or more employees.
Several fashion businesses in Australia already meet these targets, including Accent Group, Myer, Premier Investments, and Wesfarmers which owns Kmart and Target Australia as well as Workwear Group.
Other entities that don’t meet the above thresholds will then be phased in over the next three years.
The new draft regulatory guide released by ASIC and available on its website, 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 related to the sustainability report's contents and sustainability-related financial disclosures outside the sustainability report.
“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 commissioner Kate O’Rourke said.
ASIC’s Consultation Paper 380 Sustainability reporting (CP 380) seeks stakeholder feedback on the draft guide, including whether any ASIC legislative instruments that grant relief concerning financial reporting or audit requirements should be extended to sustainability reporting, as well s 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“We want industry to engage with our draft guidance and what we are proposing.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,” 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 urges all reporting entities to prepare for the new climate disclosure regime.
Feedback on CP 380 is due by December 19, 2024.