Clarity in corporate reporting - August-September 2026 monthly newsletter

ASIC reviews December 2026 sustainability reports and makes suggestions for further improvement

ASIC has released Report 839 ASIC's review of sustainability reports lodged for 31 December 2025, providing its first substantive assessment of reporting practices under Australia’s mandatory climate-related financial disclosure regime. Overall, ASIC observed that statutory reporting has increased the quality, quantity and consistency of climate-related financial information compared with previous voluntary reporting.

ASIC reviewed 40 sustainability reports, evenly split between listed and unlisted entities, from 312 reports lodged by entities with 31 December 2025 year ends. ASIC considers that entities generally complied with the basic statutory requirements and engaged in good faith with AASB S2. ASIC also saw evidence that the requirements are prompting entities to revisit governance and risk management processes. However, ASIC noted that practice was more mixed for forward-looking disclosures and those involving assumptions or judgement.

ASIC identified eight key actions for entities preparing future sustainability reports which build on earlier observations published by ASIC in May 2026:

• Connect sustainability and financial reporting. Explain how information in the sustainability report connects with relevant financial statement disclosures, including cross-industry metrics and current and anticipated financial effects
• Consider quantitative financial information. Where material current and anticipated financial effects are disclosed qualitatively, carefully consider whether quantitative information can also be provided and, if not, clearly explain why
• Take a broad view of climate-related risks and opportunities. Consider past events, current and forecast conditions and direct and indirect effects throughout the value chain
• Make judgements and uncertainty transparent. Provide clear, effective and proximate disclosure of relevant judgements, assumptions and areas of measurement uncertainty, including those underpinning the identification of risks and opportunities and calculation of cross-industry metrics
• Consider mandatory climate-related targets. AASB S2's definition of climate-related targets extends to targets an entity is required to meet by law or regulation, including the Safeguard Mechanism
• Keep material information prominent. Additional voluntary climate information should not obscure material climate-related financial information
• Apply the cross-referencing requirements carefully. Cross-referenced information must, among other requirements, be available on the same terms and at the same time as the sustainability report
• Avoid inappropriate disclaimers. Disclaimers that conflict with the statutory reporting framework and may confuse or mislead users should not be used. ASIC considers disclaimers indicating users should not rely on information contained in the sustainability report or stating the entity took no responsibility for the accuracy or completeness of certain information to be “problematic and contrary to the legislative policy of Chapter 2M sustainability reporting”.

ASIC’s detailed observations also highlight some practical challenges behind these actions. 95% of entities reviewed identified at least one climate-related risk or opportunity that could reasonably be expected to affect their prospects, while 37.5% provided only qualitative information rather than a specific amount or range when disclosing current and anticipated financial effects. 82.5% relied on the first-year transitional relief from Scope 3 greenhouse gas emissions disclosure, which will not be available in their second year of applying AASB S2.  ASIC notes that Scope 3 information is likely to involve estimation and points to the proportionality mechanisms available under AASB S2 and the importance of faithful representation rather than absolute precision.

ASIC also highlights the need to distinguish between anticipated financial effects and climate resilience. Anticipated financial effects reflect the entity’s current plans and expectations for the future, while climate resilience considers how those plans would be affected under the conditions contemplated by different climate scenarios. ASIC observed instances where these distinct requirements had not been separately considered.

Reporting within corporate groups is another area requiring particular attention. ASIC found that wholly owned subsidiaries within larger groups did not always provide sufficient information to explain how broader group governance and risk management practices applied to the reporting entity. Similar issues arose with climate-related targets, where it was sometimes unclear whether a group-level target applied to the reporting entity, whether the entity was responsible for contributing to it and, if so, to what extent. ASIC encourages entities within larger corporate groups to provide sufficient information about the application of group-level governance, risk management and targets at the reporting entity level.

To assist entities in responding to ASIC’s observations, the report includes examples of both better and less effective disclosure practices, which together provide insights into ASIC’s expectations in various areas. For example, ASIC highlighted as better practice a reporting entity that used a diagram to illustrate the component parts of its upstream and downstream value chain, clearly showing where climate-related risk and opportunity effects may occur. By contrast, a less effective example involved an entity that disclosed an impairment relating to an investment project in its financial statements but did not describe the impairment in its sustainability report or explain the connection between the project and a related climate-related opportunity.

Overall, ASIC’s review points to an encouraging start, but also to the next stage in the development of Australian sustainability reporting. As practices mature, the focus is likely to be increasingly on disclosures that clearly communicate connections, judgements and uncertainty, both within the sustainability report and between climate disclosures, the financial statements and broader group arrangements.

ASIC also encourages entities to make use of educational and guidance materials available on mandatory sustainability reporting, including the educational modules developed by ASIC in partnership with the AASB and the University of Technology Sydney, and the materials released by the AASB through the AASB S2 knowledge hub.

ASIC will continue its surveillance in 2026–27, including a review of a sample of sustainability reports lodged by Group 1 entities with 30 June 2026 year ends.

These observations align closely with those identified in our earlier Clarity publication Early insights into Wave 1 of Australian climate reporting, which covers statistics on listed reporting entities as well as observations from our experience working with both listed and unlisted entities.

More information:

• ASIC Media Release 26-222MR ASIC observes improved sustainability reporting and notes areas for further development
• ASIC Report 839 ASIC’s review of sustainability reports lodged for 31 December 2025
• Clarity publication Early insights into Wave 1 of Australian climate reporting.

Treasury seeks views on implementing previously announced Budget reforms

Treasury has released a consultation as the next step in the process announced by the Federal Government in the 2026-27 Budget to improve the efficiency of climate-related financial disclosures.

The consultation focuses on three main topics:

• Adjusting sustainability assurance settings. The consultation paper seeks views on whether and how to reduce the “reasonable assurance” requirement for sustainability reports under the Corporations Act 2001 that would be required for all entities from 2030.  The paper puts forward options of reducing the requirement to “limited assurance”, delaying the transition to reasonable assurance to 2035, or requiring reasonable assurance for only “mature” sustainability reporting metrics (such as scope 1 and scope 2 emissions)
• Improving consistency in the application of requirements. The Government is seeking feedback on areas “where additional guidance may assist implementation of the sustainability reporting framework” in areas such as the proportionality mechanisms in AASB S2 Climate-related Disclosures, and the “no material climate-related risks or opportunities” relief in the Corporations Act 2001. The paper notes that suggestions will be communicated to the relevant agency, such as the AASB, ASIC or the forthcoming External Reporting Australia and its subsidiary boards.
• Setting clearer boundaries on value-chain information requests.  The paper notes that reporting practices observed overseas under similar climate disclosure requirements have highlighted the potential value of clearer boundaries on value-chain information requests. The options put forward include providing additional guidance on what constitutes a reasonable request for information from an entity’s value chain or reducing supply chain administrative burdens through improving domestic emissions factors. The report notes that standardising information that could be requested of supply chain entities (e.g. a template) was not put forward as an option as it risks encouraging reporting entities to issue data requests when they are not necessary under AASB S2.

The consultation paper also seeks feedback on other “opportunities” such as improved alignment between domestic frameworks (particularly the National Greenhouse and Energy Reporting (NGER) regime and its fixed reporting period), and changing registered company auditor (RCA) practical experience requirements in light of the introduction of the sustainability reporting requirements. 

In addition, the Government would welcome suggestions for “additional efficiency-enhancing reforms that are consistent with the principles underpinning [the] consultation process” but notes it is not seeking views on changes to scope 3 emissions reporting requirements or the entities required to report under the regime (noting elsewhere the forthcoming doubling of the revenue and asset thresholds for large proprietary companies under the Corporations Act 2001).

The consultation is open for comment until Friday 2 October 2026 and contains focused questions for reporting entities, assurance providers and users of sustainability reports.

Separately, the Productivity Commission is calling for submissions on improving non-financial business reporting requirements.  This separate consultation is seeking input on the cumulative costs of sustainability and environmental reporting, opportunities to improve its efficiency and how mandatory sustainability reporting fits with existing reporting.  The call for submissions closes on 30 September 2026.

New instruments immediately effective, with important exceptions

ASIC has released two Corporations Instruments, bringing together many accounting and auditing relief instruments into two consolidated instruments. 

The release of the consolidated instruments is part of ASIC's regulatory simplification initiative which was originally exposed for comment in September 2025. That consultation proposed a single consolidated instrument for accounting, financial reporting, sustainability and auditing matters.  However, ASIC subsequently consulted on two separate instruments dealing with financial and sustainability reporting, and auditing matters.

Together, the two new instruments consolidate the following 17 reporting and auditing relief instruments covering financial and sustainability reporting and auditing requirements:

Consolidated into ASIC Corporations (Annual and Half-year Reporting) Instrument 2026/468

• ASIC Corporations (Reporting by Stapled Entities) Instrument 2023/673
• ASIC Corporations (Parent Entity Financial Statements) Instrument 2021/195
• ASIC Corporations (Financial Reporting: Natural Person Licensees) Instrument 2017/307
• ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204
• ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183
• ASIC Corporations (Disclosing Entities) Instrument 2016/190
• ASIC Corporations (Synchronisation of Financial Years) Instrument 2016/189
• ASIC Corporations (Electronic Lodgment of Financial and Sustainability Reports) Instrument 2026/59
• ASIC Corporations (Disregarding Technical Relief) Instrument 2026/180
• ASIC Corporations (Post Balance Date Reporting) Instrument 2025/437
• ASIC Corporations (Non-Reporting Entities) Instrument 2025/436
• ASIC Corporations (Related Scheme Reports) Instrument 2025/438
• ASIC Corporations (Stapled Group Reports) Instrument 2025/439

Consolidated into ASIC Corporations (Auditing) Instrument 2026/469

• ASIC Corporations (CCIV Auditors) Instrument 2024/668
• ASIC Corporations (Auditor Independence) Instrument 2021/75
• ASIC Corporations (Audit Relief) Instrument 2016/784.

With certain exceptions, the consolidated instruments are immediately effective and repeal the above instruments. Therefore, entities relying on the relief under the superseded instruments should ensure they refer to the new instruments going forward.

Importantly, under transitional provisions in the new instrument, the existing rounding instrument will continue to apply to financial years and half-years ending before 1 January 2027. This means that full and half year reports at 31 December 2026 can continue to refer to ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2026/183. This is helpful given the existing instrument was only issued earlier this year, requiring all directors' reports and financial reports to change to refer to the new instrument.  However, financial reports for periods ending after 31 December 2026 will need to refer to the new consolidated instrument.

Similar deferred application applies to part of the consolidated auditing instrument.

The new instruments do not include financial reporting relief for wholly-owned companies. This relief is subject to a separate consultation and the Federal Government announced in the 2026-27 Budget that it intends to legislate and simplify this relief.  Given the existing wholly-owned instrument sunsets on 1 October 2026, an ‘interim’ instrument is expected before the legislative simplification is put in place. 

More information:

• ASIC Corporations (Annual and Half-year Reporting) Instrument 2026/468
• ASIC Corporations (Auditing) Instrument 2026/469.

AASB issues two amendments ahead of AASB 18 adoption

The AASB has issued two Amending Standards to assist with the adoption of AASB 18 Presentation and Disclosure in Financial Statements and related amendments in AASB 107 Statement of Cash Flows

• AASB 2026-3 Amendments to Australian Accounting Standards – Fair Value Option for Investments in Associates and Joint Ventures. This Amending Standard clarifies which entities are eligible to measure investments in associates and joint ventures at fair value through profit or loss under AASB 9 Financial Instruments instead of applying the equity method under AASB 128 Investments in Associates and Joint Ventures. These amendments apply to annual reporting periods beginning on or after 1 January 2027 (except for not-for-profit and superannuation entities where they apply a year later).  More information on these amendments can be found in our iGAAP in Focus newsletter
• AASB 2026-4 Amendments to Australian Accounting Standards – Application of AASB 18 and AASB 107 by Superannuation and Not-for-Profit Entities and Operating Cash Flow Reconciliation. This Amending Standard provides targeted relief from forthcoming requirements in AASB 18 and related amendments in AASB 107.  The amendments generally apply to annual reporting periods beginning on or after 1 January 2028 (the same effective date as the application of AASB 18 by not-for-profit and superannuation entities).

Treasury guidance on climate-related transition planning

Treasury has released Climate-related transition planning – Voluntary Guidance, a voluntary resource intended to support organisations in developing and improving their transition planning processes.

Climate-related transition planning is considered the ongoing, internal strategic process through which organisations identify, assess and respond to climate-related risks and opportunities and deliver on any climate ambitions. 

The document clearly notes that:

• Entities reporting under the mandatory sustainability reporting requirements in the Corporations Act 2001 are not required to prepare transition plans
• An entity’s transition plan does not need to align with the voluntary guidance contained in the document
• The guidance has not been developed to inform disclosures required under Chapter 2M of the Corporations Act 2001 or any other aspect of sustainability reporting (entities should instead refer to other materials made available by the AASB or ASIC).

The voluntary resource may be useful for entities without a current transition plan that wish to develop a plan, or those wishing to improve their existing transition planning process.

For specific guidance on transition plans and the associated disclosure requirements in AASB S2 Climate-related Disclosures, entities should also refer to:

• ISSB Guidance document Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2 (published June 2025)
• AASB Educational material Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with AASB S2 (the Australianised version of the ISSB document, published in July 2026).

ASIC corporate plan

ASIC has released its Corporate Plan 2026-27, confirming its ongoing focus on:

• Improving the quality of financial reports and audits through targeted reviews of financial reports and audit files of listed and unlisted companies, registrable superannuation entities and managed investment schemes.  The plan notes ASIC will review “compliance with applicable standards, including valuation issues”
• Addressing companies and other regulated entities failing to lodge financial reports
• Improving the quality of sustainability reports by reviewing the reports of listed and unlisted Group 1 entities, whilst noting it will continue a “pragmatic and proportionate approach” to sustainability reporting.

GHG Protocol and ISO move towards a single global standard

GHG Protocol and ISO have announced plans to develop a single harmonised corporate greenhouse gas accounting standard, combining the world's most widely used carbon accounting frameworks. The move aims to simplify emissions reporting, improve consistency across jurisdictions and provide a common foundation for climate reporting globally. 

Under a new timeline approved by the GHG Protocol and ISO governance bodies, a consolidated public consultation is planned for Q2 2027, with the joint standard expected to be published late in 2028.

Any implications of the resulting standard for the measurement requirements in IFRS S2 and AASB S2 would need to be considered by the ISSB and AASB, respectively.

ASX consultation on corporate governance recommendations

ASX has proposed a revised 5th edition of its Corporate Governance Principles and Recommendations, aimed at modernising the framework and reducing duplication with existing legal, regulatory and sustainability reporting requirements. While retaining the established "if not, why not" approach, the draft places greater emphasis on board effectiveness, organisational culture, stakeholder engagement and audit oversight. 

Comments on the proposals closed on 14 September 2026. The ASX Advisory Group aims to recommend final changes to the ASX Board by the end of 2026.  

ASIC launches sustainability reporting video series

ASIC has announced the launch of its sustainability reporting video series, consisting of eight educational modules on sustainability reporting.  

The videos were developed in conjunction with the AASB and the University of Technology Sydney and cover key topics presented at ASIC’s in-person workshops and virtual webinars on sustainability reporting.

ASIC encourages Group 2 and Group 3 entities to begin building their capability and prepare for sustainability reporting early.

APESB introduces sustainability reporting professional requirements

The Accounting Professional & Ethical Standards Board (APESB) has issued APES 206 Conformity with Sustainability Reporting Standards, a new professional and ethical standard addressing accountants' responsibilities when preparing, presenting or compiling sustainability information, or performing sustainability assurance engagements. The standard fills a gap in the existing APES framework, providing sustainability reporting obligations analogous to those in APES 205 Conformity with Accounting Standards.

APES 206 requires members to take reasonable steps to ensure sustainability information complies with applicable reporting frameworks, including the Australian Sustainability Reporting Standards where relevant.  The standard is effective for professional activities performed on or after 1 January 2027, with early adoption permitted.