Mandatory Sustainability Reporting Standards Are Now Active

 
 

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, which proposed a standard for Australia’s mandatory climate reporting scheme, received legislation in September 2024.  

This means that entities that fall under the defined criteria are required to prepare a ‘Sustainability Report’ that discloses information about their climate-related risks in line with the ASRS Standards (Australian Sustainability Reporting Standards) that have been released by the AASB (Australian Accounting Standards Board). This legislation is now in effect, meaning organisations that meet the criteria will be required to create sustainability reports for their financial years starting on or after 1 January 2025. 

What are ASRS standards? 

The ASRS standards were first issued in September 2024 and contain two categories: 

  1. AASB S1: 

    This is a voluntary standard. Learn more details about what is included in the standard here. 

  2. AASB S2: 

This is the mandatory standard. Learn more details about what is included in the standard here. 

What entities will be required to report? 

Organisations that prepare financial reports under Section 292A of the Corporations Act are also required to prepare sustainability reports. The following table from the ASIC website further categorises organisations that fall under the criteria, as well as their obligations and reporting periods. 

 
 

Image Source: ASIC

What should be reported? 

According to ASIC, the sustainability reports must contain 3 main areas. 

  1. Climate statements for the year 

    These must comply with the ASRS standards mentioned above and must disclose information on: 

    • climate-related financial risks and opportunities 

    • metrics and targets relating to climate, including factors like greenhouse gas emissions 

    • information about governance, strategy, or risk management relating to the above risks, opportunities, metrics, and targets. 

    Organisations must also share information about their climate resilience, which must be evaluated under two possible scenarios. Source: ASIC 

  2. Any notes to the climate statements 

    Here, organisations must disclose: 

    • Anything that is required by the minister in regard to the preparation of climate statements or what is included in the climate statements 

    • Any information that is required by the sustainability standards 

    • Any other information that is required  

    Source: ASIC 

  3. Directors’ declarations on climate statements and any notes 

    Under this, starting from 1 January 2028, directors of the organisations are required to include a declaration expressing their opinion on whether the report created complies with the Corporations Act and sustainability standards. Until then, they are only required to express their opinion on whether reasonable steps have been taken to ensure the Sustainability report complies with the Corporations Act. Source: ASIC 

So, what if your organisation is a small entity that doesn’t have any material climate risks or opportunities? The ASIC states that such entities should create their sustainability report stating that they have no material climate risks or opportunities and must explain the reasoning behind it. 

When to lodge your sustainability report? 

Organisations must submit their Sustainability reports to ASIC within the timeframes specified below: 

  • For a registered scheme or RSE, this should be done within three months after the end of the financial year 

  • For other entities, it should be within four months after the end of the financial year 

For more information and further clarifications, visit the ASIC website. 

 

Alicja Gibert