ASIC Releases RG 280 Guide for Climate Reporting Rules

Australia's financial regulator, the Australian Securities and Investments Commission (ASIC), has published Regulatory Guide 280 (RG 280) to give guidance on compliance requirements under Australia's mandatory climate reporting legislation. The legislation, passed in September 2024, requires public companies, large proprietary companies, and significant asset holders to report climate-related risks, opportunities, and greenhouse gas emissions.

ASIC Commissioner Kate O'Rourke highlighted the importance of these new requirements, saying that high-quality, consistent, and comparable climate-related financial information will allow investors and other stakeholders to make well-informed decisions. The release of RG 280 represents a significant milestone in Australia's drive to bring corporate reporting into line with global sustainability standards.

Pragmatic Enforcement Approach

ASIC has taken a "proportionate and pragmatic" approach to enforcement, favoring serious or reckless wrongdoing and giving companies time to adapt to the new regime. ASIC will first target direct engagement with companies, offering them corrective opportunities before resorting to enforcement action. The regulator is aware that sustainability reporting is new in Australia and that market practice and policy relating to climate-related financial disclosures will continue to develop domestically and abroad.

ASIC's enforcement strategy will focus on firms that exhibit egregious non-compliance, for example, those that are guilty of reckless behavior or do not prepare the necessary sustainability reports. This balanced strategy is designed to assist businesses in incorporating climate-related disclosures into their financial reporting procedures while holding accountable those that wilfully ignore their responsibilities.

Timeline for Gradual Implementation

These obligatory reporting requirements are to be progressively implemented, first with Australia's largest firms starting in July 2025. Those that have to report for the first stage include firms having more than 500 employees, revenues of greater than $500 million, or assets of over $1 billion, and also asset owners dealing with over $5 billion assets.

Medium-sized entities will have to start reporting in July 2026, and smaller entities will have to start reporting in July 2027. The staggered approach ensures that entities of different sizes are given enough time to prepare their sustainability reporting frameworks and align with ASIC's expectations.

Improvements After Consultation

RG 280 includes substantial improvements after consultations with stakeholders. One of the most significant inclusions in the final guide is specific guidance on climate scenario analysis and scope 3 emissions disclosure. Scope 3 emissions, which are indirect emissions across a company's value chain and through its product usage, tend to be the most difficult to quantify and report. Including this type of guidance is intended to assist companies in making their emissions data more accurate and reliable.

The guide also includes specific guidance for company directors on their role within the new reporting regime. Reporting entity directors have a responsibility to comply with the law and include sustainability disclosures in their governance and financial reporting practices. ASIC has explained how companies can use sustainability reporting thresholds, responding to concerns from businesses about their requirements under the new system.

ASIC Commissioner O'Rourke emphasized the significance of RG 280 in facilitating the effective operation of Australia's sustainability reporting regime. She explained that ASIC will continue to enhance its set of publications on sustainability reporting as market practice evolves, so that companies can benefit from current guidance and best practice.

Support for Companies and Possible Relief Measures

To acknowledge the difficulties that companies could encounter in transferring to the new reporting landscape, ASIC has said that it will be able to grant relief from reporting and audit rules in certain situations. The regulator will also offer focused assistance to ease the complexity of sustainability reporting.

ASIC's strategy is one of balance between enforcement and support, recognizing that firms are at various levels of readiness. While the regulator will pursue action against firms that do not comply, it is also keen to ensure a seamless transition through offering guidance and flexibility where necessary.

A Milestone in Australia's Sustainability Reporting Journey

The issuance of RG 280 is a very important milestone on the path toward corporate sustainability for Australia. Aligned with best global practices relating to climate financial disclosures, it is reaffirming Australia's commitment to accountable, transparent business practices and business responsibility.

With the evolving regulatory framework, ASIC's interaction with businesses, investors, and other stakeholders will be central to determining Australia's future direction for sustainability reporting. The gradual implementation and realistic enforcement strategy signal an appreciation of the intricacies at stake while ensuring that firms advance toward more climate transparency.

With mandatory reporting commencing in 2025 for large firms and being extended to smaller companies over time, businesses need to prepare for closer examination of their climate disclosures. RG 280 offers the required guidance to assist businesses in meeting the law, making Australia a leader in corporate climate accountability.