Clarity in corporate reporting – March-April 2025 monthly newsletter

Understand how ASIC interprets and intends to regulate Australia’s mandatory sustainability reporting

On 31 March 2025, ASIC released a new Regulatory Guide (RG 280) on Australian mandatory sustainability reporting. The guide explains the mandatory sustainability reporting regime in Australia, provides ASIC’s views on certain interpretational issues and explains how ASIC intends to administer the law.

Key matters discussed in RG 280 include:

• Scope. RG 280 provides guidance on which entities must prepare a sustainability report under the Corporations Act 2001. In response to feedback from its earlier consultation, ASIC has provided some guidance on how assets, revenues and employees are determined when applying the sustainability reporting threshold tests. However, in an accompanying feedback report, ASIC notes the need for judgement in this area. ASIC also notes that a reporting entity that is an Australian subsidiary of a foreign parent must prepare an individual sustainability report and cannot rely on or lodge the foreign parent’s sustainability report to avoid preparing a sustainability report for the Australian entity. ASIC has also provided relief for stapled entities
• Content. RG 280 explains the content of the sustainability report, including the key requirements of the Corporations Act 2001 (including the legislative requirements for specific scenario analyses) and AASB S2 Climate-related Disclosures. ASIC notes that it will permit voluntary sustainability-related information (for example applying AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information) to be included in a sustainability report provided that mandatory information is clearly identifiable and not obscured. ASIC also provides its views on selected content topics such as scope 3 GHG emissions and the proportionality mechanisms and exceptions under AASB S2
• Disclosures outside the sustainability report. ASIC encourages entities to adopt the definitions from AASB S1 and AASB S2 when those terms are also used outside the sustainability report, such as in directors’ reports (containing the operating and financial review), fundraising documents and promotional material. This would apply to terms such as climate resilience, scope 1, 2 and 3 greenhouse gas emissions, and climate-related physical and transition risks. ASIC also provides guidance on climate-related financial information in prospectuses and product disclosure statements
• Supervision and enforcement. ASIC notes that it will take a “proportionate and pragmatic” approach during the phasing in of the sustainability reporting requirements. ASIC has provided relief to allow electronic lodgement of sustainability reports. ASIC also sets out its policy of when it may grant additional individual relief
• Directors’ duties. RG 280 notes the need for directors to have an understanding of the entity’s reporting obligations and climate-related risks and opportunities, to require the establishment of systems, controls, policies and procedures, and to apply a critical lens to disclosures proposed by management
• Modified liability. ASIC notes that statements are only protected if they are made for the purposes of complying with a sustainability standard, and so do not extend to other information in the sustainability report that is beyond the sustainability statements, nor to voluntary information outside the sustainability report (subject to certain conditions). ASIC further notes that if the Government’s proposed amendments to the modified liability regime were to be enacted, it will update its regulatory guidance to reflect the changes.

More information:

• ASIC media release 25-051MR ASIC issues sustainability reporting regulatory guide
• ASIC Regulatory Guide RG 280 Sustainability reporting
• ASIC Report REP 809 Response to submissions on CP 380 Sustainability reporting
• ASIC Corporations (Amendment) Instrument 2025/164, which amends ASIC Corporations (Financial Reporting by Stapled Entities) Instrument 2023/673 and ASIC Corporations (Electronic Lodgement of Financial Reports) Instrument 2016/181.

Monitor developments in responding to financial and sustainability reporting

As entities are ramping up preparations for the upcoming financial reporting season and forthcoming mandatory sustainability reporting, it is important to adapt to local and global developments.

For example, entities should consider the implications of the following:

• Federal election. With the calling of the Federal Election to be held on 3 May 2025, bills before Parliament lapse (see unlegislated measures). This may impact accounting where unlegislated measures impact tax accounting and forecasts. Furthermore, the potential for further amendments to mandatory climate reporting (both from the government and opposition) demands an agile preparatory approach
• Australian sustainability reporting developments. The AASB decided to fast-track an Australia-equivalent exposure draft on proposed amendments to IFRS S2 Climate-related Disclosures once released by the ISSB in the second quarter of the year. The proposed changes include scope exemptions from Scope 3 emissions, and the use of alternatives to the latest global warming potential (GWP) values and GHG Protocol and Global Industry Classification Standard (GICS). The amendments are expected to be finalised by the end of calendar 2025
• Global sustainability reporting developments. With ongoing uncertainty on the final form of sustainability reporting in Europe and the United States, Australian entities that may be subject to these regimes through their global reach need to carefully monitor developments 
• Global trade and tariff initiatives. Recent enacting of further tariffs in the United States and other countries has created uncertainty as to their duration and impact (including possible retaliatory tariffs, inflation and volatility in markets and exchange rates). These changes may have broad impacts on accounting, requiring careful consideration in areas such as impairment, inventories, provisions and fair values. In times of volatility, it is important to consider meaningful and transparent disclosures, the need for subsequent event disclosure and ensuring consistency between the financial statements and the remainder of the annual report.

We will continue to monitor developments and communicate them as impacts arise.

GHG Protocol FAQs on Scope 3 emissions

GHG Protocol has compiled a list of frequently asked questions (FAQ) on Scope 3 emissions and provided answers with details on where to find more information in the standard and guidance. View the FAQ here.

New IFRIC agenda decisions published

The IFRS Interpretations Committee (Committee) finalised three agenda decisions at its March 2025 meeting. These agenda decisions were approved by the IASB at its April 2025 meeting and have been published:

• Recognition of intangible assets resulting from climate-related expenditure. This decision considered whether an entity’s acquisitions of carbon credits and climate-related expenditure on research activities and development activities meet the requirements in IAS 38 Intangible Assets to be recognised as intangible assets. The Committee did not consider the question about the accounting for the acquisition of carbon credits due to the IASB’s research on pollution pricing mechanisms, some of which include the use of carbon credits. The Committee noted evidence gathered indicated no material diversity in accounting for expenditure on research and development activities, concluded the matter did not have widespread effect and decided not to add a standard-setting project to the work plan
• Guarantees issued on obligations of other entities. This decision considers a number of fact patterns involving the issue of contractual guarantees on obligations of a joint venture. The Committee observed that IFRS Accounting Standards do not define “guarantees” and no single Accounting Standard applies to all guarantees. The Committee further observed that an entity should first consider whether an issued guarantee is a “financial guarantee contract” as defined in IFRS 9 Financial Instruments. If an entity concludes it is not, the entity considers whether the guarantee is an “insurance contract” as defined in IFRS 17 Insurance Contracts. If an entity concludes it is neither a financial guarantee contract or insurance contract, the entity considers other requirements in IFRS Accounting Standards to determine how to account for the guarantee
• Recognition of revenue from tuition fees. This decision considered the period over which an educational institution recognises revenue from tuition fees. The Committee observed that such revenue is recognised over time and evidence gathered did not indicate any diversity in accounting for revenue from tuition fees. The Committee concluded that the matter did not have widespread effect and decided not to add a standard-setting project on the work plan.

Entities should consider the impacts of these agenda decisions on their current accounting and implement any necessary changes in accounting policies where necessary.

Updated Clarity publication on mandatory climate reporting 

As mentioned in our previous newsletter, the Auditing and Assurance Standards Board (AUASB) finalised a number of sustainability assurance standards, including ASSA 5010 Timeline for Audits and Reviews in Sustainability Reports under the Corporations Act 2001 (ASSA 5010), in late January 2025.

We have released an updated Clarity publication, A new era of sustainability reporting, to reflect the new assurance phasing.