First Climate Reports Offer Early Test of Australia's New Disclosure Regime

Key Takeaways

• Reporting Quality Is Becoming the Next Focus: ASIC's review suggests the conversation is shifting from whether companies can produce climate disclosures to whether those disclosures are clear, comparable, and useful to investors.
• Judgments and Assumptions Need Greater Transparency: The regulator identified disclosure of judgments as a critical area for improvement, emphasizing that readers need to understand where estimates and assumptions influence reported outcomes.
• Technical Reporting Issues Are Emerging: ASIC highlighted recurring issues involving cross-references, disclaimers, and the distinction between mandatory climate disclosures and supplementary voluntary reporting.
• Climate Risk Disclosures Must Be Better Grounded: Some reports did not consistently incorporate past events, current conditions, and future forecasts when discussing climate-related risks.
• ASIC Is Taking a Supportive Approach: While the regulator retains enforcement powers, it says its immediate focus remains on guidance, education, and helping organizations improve reporting practices as the framework matures.

Deep Dive

ASIC has delivered its first substantive assessment of Australia's new mandatory climate reporting regime, telling companies that while the initial wave of disclosures has established a foundation for comparability, significant work remains before reporting practices reach a mature and consistent standard.

Speaking at the Responsible Investment Association Australasia (RIAA) Conference in Melbourne, ASIC Commissioner Kate O'Rourke outlined six recurring issues identified during the regulator's review of early sustainability reports, ranging from the disclosure of judgments and assumptions to the use of cross-references, disclaimers, and climate-related targets. The observations come as organizations across Australia continue adapting to one of the most significant reporting changes since the introduction of International Financial Reporting Standards.

"We don't want the baseline to become the benchmark," O'Rourke said, emphasizing that first-year reports should be viewed as the beginning of an evolving reporting process rather than a finished model for future disclosures.

The comments offer an early glimpse into how ASIC intends to approach supervision of the new framework and where the regulator believes companies should focus as additional reporting entities prepare their first climate-related financial disclosures.

From Voluntary Reporting to Reporting Discipline

One theme that ran throughout O'Rourke's remarks was that climate reporting is entering a different phase. For years, climate disclosures largely developed through voluntary frameworks, investor expectations, and corporate sustainability commitments. Mandatory reporting changes the dynamic by introducing a common set of requirements against which disclosures can be assessed and compared.

According to O'Rourke, that consistency is beginning to give investors a clearer basis for evaluating climate-related risks and understanding how those risks connect to an organization's financial position.

"It has been a long time, talking about climate change as a set of commitments, targets, principles, and frameworks," she said. "I think the thing about disclosure is that it is a levelling force."

ASIC reviewed a sample of sustainability reports submitted by listed entities reporting against the December 31 reporting period. While the regulator noted that variability remains across reports, O'Rourke said this was expected given that organizations were implementing the requirements independently and often from different starting points.

Rather than viewing those differences as a concern, ASIC appears focused on ensuring reporting quality improves over time as preparers, auditors, investors, and regulators gain more experience with the framework.

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