Beyond Compliance: The Architecture of Australia’s Sustainability Reporting Regime

A technical interpretation of ASIC Regulatory Guide 280 (March 2025)

1. The new reporting era

Australia’s sustainability reporting framework has entered a new phase of legal and operational maturity. With the release of ASIC Regulatory Guide 280 – Sustainability Reporting (RG 280) in March 2025, sustainability disclosure has formally joined financial reporting under the Corporations Act 2001.

For the first time, climate-related information is not a matter of voluntary ESG narrative but a statutory reporting obligation. Companies large and small—ranging from superannuation trustees to energy-intensive corporates—must now treat sustainability data as financial data.

At its foundation, RG 280 operationalises section 292A of the Corporations Act, requiring entities that already lodge financial reports under Chapter 2M and that meet defined thresholds to also prepare an annual sustainability report.

This report must comply with AASB S2 Climate-related Disclosures, Australia’s domestic adoption of IFRS S2, and be audited in accordance with the AUASB assurance framework.

The architecture is deliberately international: ASIC, the Australian Accounting Standards Board (AASB), and the International Sustainability Standards Board (ISSB) now move in lockstep, linking climate transparency with the integrity of capital markets.

Purpose: from information to accountability

RG 280’s stated objective (RG 280.11) is deceptively simple: to improve the quality, consistency and comparability of climate-related financial disclosures. Yet beneath that lies a structural redefinition of fiduciary duty and market trust.

Section 224 of the ASIC Act 2001 embeds the principle that sustainability standards must yield information that is relevant, reliable, comparable, and comprehensible, enabling investors to allocate capital with confidence.

By aligning with IFRS S1 and S2, ASIC is not inventing a domestic reporting culture—it is hard-wiring Australian disclosure into a global information economy, where financial risk and climate risk are inseparable.

Scope: who reports, when, and how big is big?

Under section 292A(1), an entity must prepare a sustainability report if it (a) is required to lodge financial statements under Chapter 2M and (b) meets one of three statutory thresholds.

Corporate size threshold

At least two of three criteria are triggered:

• ≥ AUD 500 million in consolidated revenue,
• ≥ AUD 1 billion in consolidated gross assets, or
• ≥ 500 employees.

Emissions threshold

Entities registered—or required to register—under the National Greenhouse and Energy Reporting Act 2007 must report, regardless of size.

Asset-value threshold

Applicable only to registered schemes, RSEs, and retail CCIVs, where total assets ≥ AUD 5 billion.

The phased timetable

RG 280 divides the market into three cohorts (Table):

This staggered entry allows capability building and audit infrastructure to mature without destabilising financial reporting cycles.

Composition: what a sustainability report must contain

Under section 296A, the report is not a marketing brochure—it is a structured, auditable document comprising:

1. Climate statements, aligned with AASB S2 / IFRS S2;
2. Notes to the climate statements, explaining assumptions and methodologies; and
3. A directors’ declaration, confirming compliance.

Entities that identify no material financial risks or opportunities related to climate may issue a simplified statement under section 296B(1). However, that conclusion must itself be evidence-based and documented within the entity’s sustainability records (s286A).

The machinery of evidence

ASIC’s guidance is explicit: sustainability data must be verifiable and traceable.
Under section 286A, reporting entities must keep detailed sustainability records for seven years—mirroring the retention of financial ledgers.

These records include:

• GHG inventories, scenario-modelling datasets and emission factors;
• Internal board papers and risk-committee minutes;
• External expert reports, actuarial assessments, or climate models;
• Working papers supporting forward-looking assumptions; and
• Evidence underlying any “no material risk” statement.

ASIC’s enforcement powers under section 289A extend to records held electronically or offshore. If a company cannot produce its sustainability records on request, the regulator may infer the report was not substantiated.

Directors: governance under scrutiny

Duty of care and diligence

For directors, RG 280 redefines what prudence looks like. Under section 180(1) of the Corporations Act, directors must now understand climate risk as part of financial oversight.

ASIC expects boards to:

• Establish climate governance systems and internal control frameworks;
• Ensure credible methodologies for scenario analysis and emissions estimation;
• Demand evidence from management rather than rely on aspirational statements; and
• Integrate climate information into strategic planning and capital allocation.

Reliance on experts is permitted (s189) but not blind faith—directors must make an independent, informed assessment of advice received.

The directors’ declaration

Between 2025 and 2027, the declaration standard is transitional: directors must confirm they took reasonable steps to ensure compliance (s296A(6), as modified by s1707C). From 2028, that language hardens to an absolute statement of conformity with AASB S2—aligning sustainability assurance with financial audit accountability.

Liability: the safe harbour window

Recognising the uncertainty in climate data, Parliament enacted modified liability settings (s1707C–1707D).
For a limited period, only ASIC—not private litigants—may bring actions against protected statements, namely:

• Forward-looking climate statements (FY 2025 only);
• Scope 3 emissions, scenario analyses, and transition plans (FYs 2025–2027).

This protection ends as methodologies standardise and audit assurance strengthens. Crucially, it applies only to disclosures made in compliance with AASB S2—voluntary or promotional ESG commentary remains fully exposed to misleading-statement liability.

The content engine: AASB S2 in practice

AASB S2 operationalises four disclosure pillars—governance, strategy, risk management, and metrics & targets.

Technically, it demands:

• Dual-scenario analysis, anchored to temperature pathways in the Climate Change Act 2022 (e.g., 1.5 °C and >2 °C cases);
• Quantified Scope 1, 2, and 3 emissions, including financed and value-chain emissions;
• Disclosure of transition plans, offsets strategy, and dependence on carbon credits;
• Integration of financial impact pathways—on assets, liabilities, cash flows, and access to capital.

AASB S2 Appendix D codifies the qualitative characteristics of useful climate data: relevance, faithful representation, comparability, verifiability, timeliness, and understandability.

Entities must base forward-looking statements on reasonable and supportable information (paragraph 15(b), AASB S2)—a phrase that will become the evidentiary anchor for both auditors and litigators.

Supervision, relief and proportionality

ASIC’s regulatory stance is measured but firm. During the early years, enforcement will emphasise education, consistency and systemic learning rather than punitive sanction (RG 280.23).

However, the Commission retains:

• Relief powers under s342(1) to exempt entities from certain obligations where justified;
• Direction powers under s296E to compel correction of defective sustainability reports; and
• Authority to grant stapled-group reporting relief (Instrument 2023/673) for consolidated sustainability statements.

AASB S2’s proportionality clauses (paras B59–B71) acknowledge data limitations, allowing smaller entities to use “reasonable estimates without undue cost or effort”, but they must disclose the estimation approach transparently.

Intersection with existing disclosure regimes

RG 280 links sustainability reporting to existing obligations under the Corporations Act:

• Operating and Financial Review (s299A) – climate impacts must be consistent across OFR and sustainability report;
• Chapter 6D disclosure documents – prospectuses must integrate material climate risk;
• Product Disclosure Statements (Part 7.9) – environmental factors must be disclosed for investment products (ss1013D–E).

This integration avoids fragmentation, embedding sustainability information directly into the corporate reporting spine.

Implementation: what compliance teams must do now

1. Governance calibration: create board-level sustainability committees with defined reporting lines.
2. Data architecture: integrate carbon-accounting, financial, and risk data in a single control environment.
3. Scenario capability: build internal models or procure validated external scenario-analysis tools.
4. Assurance readiness: align with AUASB’s staged audit timetable through 2030.
5. Narrative discipline: ensure that voluntary ESG communications mirror the factual rigor of the sustainability report.

The new regime rewards coherence: entities that treat climate data as financial data will find compliance becomes credibility.

The bigger picture

RG 280 is more than a rulebook—it is an inflection point in corporate law. Sustainability reporting now lives under the same statutory discipline as financial reporting.

For boards, it transforms “doing ESG” into governing systemic risk. For investors, it converts pledges into decision-useful data. And for regulators, it anchors Australia within the international sustainability disclosure architecture emerging from London, Frankfurt, and Toronto.

In effect, RG 280 closes the gap between values and valuation—making climate accountability a measurable asset class.

References

• ASIC Regulatory Guide 280: Sustainability Reporting, March 2025.
• Corporations Act 2001 (ss. 292A, 296A–296E, 301A, 342, 1707C–D).
• ASIC Act 2001, s. 224.
• AASB S1 General Requirements (Sept 2024);
• AASB S2 Climate-related Disclosures (Sept 2024).
• AUASB Sustainability Assurance Timetable, 2025–2030.
• Climate Change Act 2022 (Cth).
• IFRS S1 and S2, International Sustainability Standards Board (ISSB).