On 31 March 2025, ASIC released the final version of Regulatory Guide 280 (“RG 280”). This provides guidance for sustainability reporting entities to assist them in complying with the requirements set out in the Corporations Act 2001 (Cth) (“Act”) and the Australian Sustainability Reporting Standards (“ASRS”). The guidance also covers how ASIC interprets the requirements and how it will approach the oversight and enforcement of the regime.
RG 280 provides guidance on:
Foreign parent and subsidiary entity obligations
Directors’ duties and disclosure responsibilities
Modifications to the liability framework
Climate scenario analysis requirements
Use of proportionality mechanisms
“Flow down” expectations for non-reporting entities
ASIC’s compliance and enforcement approach
Below is a summary of the key takeaways from RG 280.
1. Foreign parent entities clarification
Chapter 2M reporting entities (that fall within certain thresholds) must prepare a sustainability report.
Where an Australian subsidiary has a foreign parent entity that is not a Chapter 2M reporting entity, the foreign parent would not be required to prepare a sustainability report on behalf of the Australian subsidiary. Only the Chapter 2M Australian subsidiary must prepare a sustainability report.
This also means that even if a foreign parent is reporting under a different regime, a Chapter 2M Australian subsidiary would still need to prepare its own sustainability report.
2. Directors duties
RG 280 provides useful examples of what directors should be doing to discharge their directors’ duties and to be in a position to execute the director’s declaration. This declaration must accompany their organisation’s sustainability report.
For example, directors should be in a position to apply a critical lens and undertake an independent assessment of the proposed sustainability disclosures. If required, directors should also be able to question the appropriateness or completeness of methodologies, inputs and assumptions used to support disclosures.
This expectation applies whether or not the entity has had assistance from specialist consultants with their sustainability report. Therefore, directors are expected to apply their own independent thinking in their oversight and review of the sustainability reports, rather than simply relying on specialists.
Practical tip: We expect that this will be difficult for directors due to the technical expertise required to understand the data behind the disclosure requirements. ASIC Chair Joe Longo has recently called for “more science in the boardroom” to address compliance obligations and material business issues in the climate reporting, cybersecurity and AI space.
3. Modified liability
RG 280 clarifies ASIC’s position on the extent of the modified liability framework that applies to protected statements. ASIC has clarified that the modified liability framework:
a. does not extend to voluntary sustainability disclosures made in the sustainability report (i.e., voluntary disclosures in the sustainability report outside of the remit of ASRS 2), or extracts of the sustainability report used elsewhere (for example, in marketing); but
b. does extend to sustainability disclosures made elsewhere where:
i. the disclosures are required by law (for example, replicated statements in an OFR or PDS); and
ii. the disclosures are the same as the protected statement, or only differ in so far as the disclosures contain updates / corrections to the protected statement.
4. Higher climate temperature scenario clarification
The Act requires reporting entities to undertake climate scenario analysis against 2 temperature scenarios:
Lower temperature scenario: increase of global average temperature of 1.5 degrees above pre-industrial levels.
Higher temperature scenario: an increase in global average temperatures well exceeding 2 degrees above pre-industrial levels.
ASIC has clarified that a scenario of 2.5 degrees above pre-industrial levels meets the “well exceeding” requirement of the higher temperature scenario, and that a temperature scenario between 2 – 2.5 degrees runs the risk of not meeting these requirements.
5. Justification required if using proportionality mechanisms
ASRS has inbuilt proportionality mechanisms to ensure that entities of various sizes can apply the standards. For example, providing disclosures based on “reasonable and supportable information available to the entity at the reporting date without undue cost or effort”.
Where a reporting entity relies on these proportionality mechanisms (for example, where a disclosure requirement would come with undue cost or effort), appropriate records should be kept substantiating their reliance on these proportionality mechanisms.
ASIC has flagged that they will carefully scrutinise any argument that the ordinary costs of complying with a reporting entity sustainability reporting obligations constitute an unreasonable burden. This is because (among other things) the costs of preparing the report is a foreseeable cost for compliance and the proportionality mechanisms ensure that entities of various sizes can apply the standards.
6. “Flow down” impact of sustainability reporting
ASIC has outlined that they expect that sustainability reporting requirements will naturally begin to “flow down” to non-reporting entities as market expectations change and there is an expectation that being able to provide sustainability information is “business as usual”.
ASIC encourages non-reporting entities to align with the language used in ASRS (for example, utilising the GHG Protocol categories for measuring their greenhouse gas emissions as required by ASRS) to ensure that ASRS remains a consistent baseline for sustainability reporting.
Practical tip: We are developing a GHG Toolkit to assist SME’s in providing greenhouse gas emissions data to reporting entities.
7. ASIC approach to compliance
ASIC has reiterated that the focus of their engagement with reporting entities in the near term will be to seek clarification and additional information from reporting entities where there are inconsistencies, missing information or gaps in data reported on in the sustainability report. ASIC are more likely to proceed with enforcement investigations if misconduct by reporting entities is serious or reckless.
If your organisation requires assistance with preparing for mandatory climate reporting, or you need assistance as an organisation in the value chain of a reporting entity (who is requesting sustainability information), please contact the ESG Team for assistance.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.