ASIC Finds Climate Disclosures Improving Under Australia’s New Sustainability Reporting Rules

Key Takeaways

• Mandatory Reporting Lifts Disclosure Quality: ASIC found marked improvement in the quality, quantity and consistency of climate-related financial information compared with previous voluntary disclosures.
• Governance and Risk Processes Are Changing: Some entities adapted or updated existing governance and risk management processes in response to the new requirements.
• Forward-Looking Disclosures Need Work: ASIC identified room for improvement in disclosures involving assumptions and judgment, including aspects of strategy, metrics and targets.
• 312 Reports Have Now Been Lodged: Another 53 sustainability reports have been lodged by entities with financial years ending Dec. 31, 2025, bringing the cohort total to 312.
• ASIC Will Expand Its Review: During the 2026-27 financial year, ASIC plans to review reports from Group 1 entities with June 30, 2026 year-ends and continue examining sustainability assurance methodologies used by large audit firms.

Deep Dive

ASIC has found an improvement in climate-related financial disclosures under Australia’s new mandatory sustainability reporting regime, although the regulator says companies still have work to do on some of the disclosures that demand the most judgment. The Australian Securities and Investments Commission reviewed a sample of 40 sustainability reports lodged for financial years ending Dec. 31, 2025. Its findings provide an early picture of what mandatory reporting has changed after years in which companies largely disclosed climate information voluntarily.

The difference, according to ASIC, is already visible. The regulator observed an increase in the quality, quantity and consistency of climate-related financial information reaching the market.

“It appears that statutory reporting has not only resulted in heightened transparency, but also more meaningful engagement by entities with climate-related risks and opportunities,” ASIC Commissioner Kate O’Rourke said.

That engagement was evident inside some of the companies ASIC reviewed. The regulator found examples of entities adapting or updating existing governance and risk management processes as they worked through the new requirements. In other words, the reporting obligation was not always confined to the report.

There were weaker areas. ASIC identified opportunities to improve forward-looking disclosures and information built on assumptions or judgment, including aspects of reporting on strategy, metrics and targets. These are among the more difficult parts of climate reporting because they require companies to say something useful about an uncertain future and make clear the assumptions beneath it.

“We expect improvements over time as more information becomes available and as entities gain more experience,” O’Rourke said.

ASIC has now set out eight practical action items for companies preparing sustainability reports. They include, and where relevant expand upon, observations the regulator published in May as the first reports under the new regime began arriving.

The number of those reports is growing quickly. Since ASIC published its early observations in May, another 53 sustainability reports have been lodged by entities with financial years ending Dec. 31, 2025. That brings the total for the cohort to 312.

Australia’s statutory sustainability reporting requirements began applying to the largest entities for financial years beginning on or after Jan. 1, 2025. They cover large businesses and financial institutions required to prepare and lodge financial reports under the Corporations Act 2001 and are being introduced across three groups over three years.

The purpose is to make climate-related financial information more consistent, comparable and useful. The first batch reviewed by ASIC suggests mandatory reporting is beginning to do that, but it has also given the regulator a clearer view of where the difficult work remains.

ASIC’s attention will next move to Group 1 entities with financial years ending June 30, 2026. During the 2026-27 financial year, the regulator plans to review a sample of those sustainability reports. It will also continue discussions with large audit firms to understand the assurance methodologies they are using for sustainability reports.

At the same time, ASIC is talking with Treasury about reforms intended to make climate-related financial disclosure more efficient.

“We are supportive of measures that reduce regulatory burden whilst preserving core sustainability reporting requirements and will continue to engage with Treasury on these proposed reforms,” O’Rourke said.

There is a practical tension in that work. The disclosures ASIC wants companies to improve are often precisely the ones that require more mature systems, better information and harder judgments. Reducing unnecessary burden without thinning out that information will therefore matter as the reporting regime expands beyond its first group of companies.

For now, ASIC is treating the first reporting cycle as just that: a first cycle. Its findings are meant to give companies an early indication of what is working and where the regulator expects more.

“The findings in this report are designed to provide reporting entities with timely and accessible feedback on what we have observed to reduce regulatory uncertainty while also improving the quality of climate-related information for users,” O’Rourke said.

ASIC said it will continue supporting implementation through guidance, education and, where appropriate, regulatory relief. The next rounds of reporting will show whether the improvements it found in the first 40 reports deepen as companies gain experience, and whether the weaker areas of judgment and forward-looking disclosure begin to catch up.

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