Clarity in corporate reporting – August-September 2025 monthly newsletter

Opportunity for global stakeholders to provide input on SASB Standards in the context of ISSB standards

The International Sustainability Standards Board (ISSB) has released two exposure drafts that would amend the SASB Standards and Industry-based Guidance on Implementing IFRS S2. 

The exposure drafts are designed to support the implementation of IFRS Sustainability Disclosure Standards (ISSB Standards) by enhancing the SASB Standards.  The focus of the project is on further enhancing international applicability and improving interoperability with other sustainability-related standards and frameworks. The proposals also include amendments in relation to biodiversity, ecosystems and ecosystem services (BEES) and human capital to assist the ISSB in providing input into the research projects in these areas. 

The exposure drafts propose:

• Substantial amendments to nine SASB Standards as a result of a comprehensive review of those standards.  The nine Standards cover coal, construction materials, iron and steel, metals and mining, oil and gas and processed foods 
• Targeted amendments to other SASB Standards for 41 industries to maintain consistent disclosures on common topics, affecting disclosure topics and metrics related to greenhouse gas emissions, energy management, water management, labour practices and workforce health and safety. 

As the Industry-based Guidance on Implementing IFRS S2 is derived from, and consistent with, the SASB Standards, equivalent amendments are proposed in that document to ensure consistency.  Metrics in the industry-based guidance would be amended for 10 sectors (i.e. all sectors except the financials sector).  In addition, other metrics are proposed to be deleted or added across the industry-based guidance. 

The exposure drafts are open for comment until 30 November 2025.  The ISSB has indicated an effective date of 12 to 18 months after any revisions are made (but early adoption will be available). 

Separately, the ISSB published educational material to help companies understand the role of the ISSB industry-based guidance when applying ISSB Standards. In addition to providing context for the proposed SASB Standards amendments, the educational material may be a useful resource for entities choosing to use the ISSB’s industry-based guidance when developing disclosures under AASB S2.

In the Australian context, AASB S2 Climate-related Disclosures does not require entities to refer to or consider the SASB Standards or Industry-based Guidance on Implementing IFRS S2 (but entities can voluntarily choose to do so). 
The AASB has not conducted consultation on the full suite of SASB Standards or the Industry-based Guidance on Implementing IFRS S2 but has previously signalled an intention to finalise requirements for climate-related industry based information in Australia by 2030. 

More information:

• SASB/ED/2025/1 Proposed amendments to the SASB Standards
• Basis for Conclusions on Proposed Amendments to SASB Standards
• ISSB/ED/2025/2 Proposed Amendments to the Industry-based Guidance on Implementing IFRS S2 
• Basis for Conclusions on Proposed Amendments to the Industry-based Guidance on Implementing IFRS S2
• ISSB media release ISSB proposes comprehensive review of priority SASB Standards and targeted amendments to others
• iGAAP in Focus IASB proposes enhancements to the SASB Standards and consequential amendments to the Industry-based Guidance on Implementing IFRS S2.
• Educational material Using ISSB Industry-based Guidance when applying ISSB Standards

Consider the impacts of the forthcoming examples on reporting

In July 2025, the International Accounting Standards Board (IASB) released a near-final staff draft that contained six illustrative examples. These examples use climate-related fact patterns to illustrate how IFRS Accounting Standards apply when reporting uncertainties in the financial statements.

The early publication of the near-final examples is designed to support timely and informed application of the examples and formal feedback on the examples is not sought.  The IASB expects to publish the final examples in October 2025.

The illustrative examples are not an integral part of any specific standard and, therefore, will not have an effective date. Even though the examples are purely illustrative in nature and do not change the requirements in the standards, they might provide additional insights into how to apply those requirements.

Entities may wish to consider the illustrative examples to inform the development of disclosures on affected topics in their financial statements. 

Entities face closer scrutiny after widespread lodgement failures

ASIC has released a media release noting a high-level of non-lodgement of financial reports by previously grandfathered companies and announcing a "broader crackdown" on non-lodgement by all large proprietary companies. 

Following the removal of the financial reporting lodgement exemption for grandfathered companies in 2022, ASIC found that more than half of previously grandfathered companies did not lodge financial reports for the 2023 or 2024 financial years.

In response, ASIC has launched a broader surveillance focused on non-lodgement of financial reports by large proprietary companies, which it expects to complete in the first quarter of 2026.

In addition, the ASIC Corporate Plan 2025-26 notes large proprietary companies as examples of the types of entities that ASIC will take action against, suggesting a wider ambit of entities that may be subject to action outside the specific review.

ASIC has already included non-lodgement of grandfathered company financial reports in its financial reporting and audit focus areas for the 2025-26 financial year. These additional announcements confirm non-lodgement action as a key priority for ASIC.

ASIC advises:

• Companies to proactively review their financial reporting obligations and address instances of non-compliance.
• Auditors to notify ASIC if they suspect a company is not complying with its lodgement obligations.

Legislation introduced to expand modified liability protection for sustainability reporting

On 4 September 2025, the Federal Government introduced legislation into Parliament that would expand the modified liability protection for sustainability reporting.

Modified liability protection would be extended to:

• Sustainability reports prepared on a voluntary basis. Such reports would need to be in the same form as other sustainability reports prepared under the Corporations Act 2001, i.e. be in compliance with that Act and AASB S2 Climate-related Disclosures
• Sustainability reports prepared in accordance with an ASIC order made under the Corporations Act. The relief would only apply where the ASIC order includes provision that the modified liability provisions apply.

In both cases, the directors would also be required to make a declaration in the sustainability report (in a prescribed way) that the modified liability provisions apply.

No changes are made to the nature and timing of the effect of the modified liability provisions.

The legislation must pass both houses of Parliament and receive Royal Assent to become law.

New educational material on sustainability reporting

New educational material on applying sustainability standards have recently been published:

• The ISSB has published Disclosing information about anticipated financial effects applying ISSB Standards covering anticipated financial effects of sustainability-related risks and opportunities on an entity’s financial position, financial performance and cash flows over the short, medium and long term
• The AASB has published Greenhouse Gas Emissions Disclosure requirements applying AASB S2 Climate‑related Disclosures, which is an Australianised version of an earlier ISSB publication providing insights into various frequently asked questions about greenhouse gas emissions.

Educational material is not part of sustainability standards and does not add to or change the requirements in any standard. However, entities preparing for mandatory sustainability reporting may find this educational material useful, particularly as it covers some challenging areas of sustainability reporting.

ASIC regulatory simplification targets regulatory guidance and legislative instruments

On 3 September 2025, ASIC released a new report on regulatory simplification, which outlines ASIC’s progress on simplification in the way ASIC administers the law in areas where it regulates and seeking input on further initiatives.

The report’s release was foreshadowed in ASIC’s recently released Corporate Plan 2025-26, which includes an emphasis on simpler and better regulation, with ASIC considering the best approach is “to attack a clearly identified group of specific problems”.

From a corporate reporting perspective, the report proposes:

• To improve access to regulatory information through improving the ASIC website (already actioned), reviewing the approach to regulatory guidance (noting it is targeted at technical users, dispersed across a range of documents, inconsistently named, unclear and does not address small-business needs) and introducing sector-based regulatory roadmaps
• To reduce complexity in regulatory documents through simplifying and consolidating legislative instruments using best-practice drafting principles, including two pilots of consolidating and streamlining legislative instruments (21 identified Corporations Instruments related to financial reporting, accounting and audit and 2 instruments related to investor directed portfolio services (IDPS) and IDPS-like schemes).

Feedback is requested by 15 October 2025.

ASX surveillance on share-price movements

The ASX has clarified its expectations on continuous disclosure in its July 2025 Compliance Update – 8/25, focusing on ‘market sensitive earnings surprises’ during the current reporting season. Under Listing Rule 3.1 and section 674 of the Corporations Act 2001, entities have a legal obligation to notify the market if expected earnings materially differ (upwards or downwards) from market expectations that may affect the entity’s share price.

The ASX is closely monitoring the S&P/ASX 200 and if a company’s share price moves by 10% or more following the release of its results, the ASX will likely send an aware letter in the absence of other factors that readily explain the price movement.

ACNC focus areas for 2025-26

The Australian Charities and Not-for-profits Commission (ACNC) has updated its ACNC Regulatory Focus areas for the 2025-26 financial year.

New focus areas for 2025-26 include:

• Effective record keeping of both financial and operating records
• Money laundering or terrorism financing. The ACNC will perform compliance reviews to ensure that charities that may be at an increased risk of being misused for terrorism financing understand their need to protect themselves, and are meeting the Financial Action Task Force (FATF) obligations. The ACNC clarified that terrorism financing can be viewed in a similar way to money laundering.

Draft Treasury guidance on preparing climate-related transition plans

The Australian Treasury has released draft voluntary guidance for climate-related transition plans, open for public consultation until 24 September 2025.

This guidance, part of the Sustainable Finance Roadmap, provides an introductory overview of best practices for climate transition planning and recommends a disclosure framework for Australian organisations.

Transition plans themselves aren’t mandatory, but, under AASB S2, entities must disclose information about any plan they have prepared. In addition, the draft guidance encourages entities to publish their transition plan and stakeholders may increasingly expect publication.

SBTi releases net-zero Standard for banks and investors

The Science Based Targets initiative (SBTi) has released its Financial Institutions Net-Zero Standard (FINZ), seeking to align finance activities with climate outcomes. 

SBTi claims FINZ is the first science-based framework to guide banks, asset owners, asset managers, insurers, and other financial institutions towards net-zero emissions by 2050, i.e. it helps financial institutions to understand how much, and how quickly, they must reduce or eliminate carbon emissions to prevent the worst impacts of climate change. Consistent with the requirements under Australian Sustainability Reporting Standards for financial institutions to
report ‘financed emissions’, the FINZ focuses on indirect emissions.

By setting targets against the Standard and in order to be validated against the Standard, financial institutions will have to publicly commit to reaching net-zero by 2050 or earlier. Companies’ commitments must include near- and long term targets and they must annually report on their progress.

In an accompanying media release, SBTi indicated that nearly 135 financial institutions on six continents have signed up to the new standard.