ASIC RG 280 — ASIC Regulatory Guide – RG 280 Sustainability reporting

Page 1 REGULATORY GUIDE 280 Sustainability reporting March 2025 About this guide This guide is for entities required to prepare a sustainability report under Ch 2M of the Corporations Act (reporting entities). This may include companies (including registered corporations under the National Greenhouse and Energy Reporting Act 2007), registered schemes, registrable superannuation entities and retail corporate collective investment vehicles. It explains how ASIC will exercise specific powers under legislation (primarily the Corporations Act), how ASIC interprets the law and the principles underlying ASIC’s approach. It also provides practical guidance to entities about complying with their sustainability reporting obligations. Reporting entities may ask for information from entities within their value chain, including small businesses and farmers. These entities should refer to ASIC’s website about sustainability reporting and what it means for them. Page 2 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This guide was issued in March 2025 and is based on legislation and regulations as at the date of issue. Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. IFRS Foundation and International Sustainability Standards Board IFRS materials are subject to copyright. Copyright © 2025 IFRS Foundation. References in this regulatory guide to IFRS Foundation materials are used with the permission of the IFRS Foundation. All rights reserved. Reproduction and use of rights are strictly limited. To the extent permitted by applicable law, the International Sustainability Standards Board and the IFRS Foundation expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. Page 3 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 3 Contents A Overview ........................................................................................... 4 Sustainability reporting ...................................................................... 4 Objective of sustainability reporting ................................................... 6 ASIC’s role ......................................................................................... 8 Outline of regulatory guide................................................................. 9 B Preparing the sustainability report .............................................. 12 Who must prepare a sustainability report ........................................ 12 Determining sustainability reporting thresholds ............................... 14 Consolidated entities or group members of stapled groups ............ 16 Non-reporting entities ...................................................................... 17 Obligation to keep sustainability records ......................................... 18 Directors’ duties ............................................................................... 19 Modified liability settings .................................................................. 21 C Content required in the sustainability report.............................. 25 Overview of required content ........................................................... 25 Statements of no material financial risks or opportunities relating to climate.......................................................................................... 26 Statements with forward-looking climate information ...................... 27 Cross-referencing ............................................................................ 29 Labelling........................................................................................... 30 Notes to climate statements ............................................................ 31 Climate-related scenario analysis .................................................... 32 Scope 3 greenhouse gas emissions................................................ 33 Proportionality mechanisms and exceptions under AASB S2 ......... 35 D Sustainability-related financial disclosures outside the sustainability report ...................................................................... 37 Overview of sustainability-related financial information ................... 37 Sustainability-related financial information in the OFR .................... 39 Sustainability-related financial information in disclosure documents under Ch 6D ..................................................................................... 41 Sustainability-related financial information in PDSs ........................ 43 E ASIC’s administration of the sustainability reporting requirements .................................................................................. 48 ASIC’s approach to supervision and enforcement during the early years of sustainability reporting ....................................................... 48 ASIC’s power to grant sustainability reporting and audit relief ........ 49 ASIC’s general approach to sustainability reporting and audit relief . 50 Legislative instruments granting relief for sustainability reporting ... 51 Individual relief ................................................................................. 52 Specific considerations for some applications ................................. 55 How to apply for relief ...................................................................... 57 Review of sustainability reports ....................................................... 57 Key terms ............................................................................................... 60 Related information ............................................................................... 69 Page 4 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 4 A Overview Key points Under Ch 2M of the Corporations Act 2001 (Corporations Act), entities must prepare and lodge a sustainability report if they: • are required to prepare an annual financial report under Ch 2M; and • meet the relevant sustainability reporting thresholds under s292A. For these entities, sustainability reporting forms part of their annual reporting obligations. The objective of sustainability reporting is to improve the quality, consistency and comparability of climate-related financial disclosures to enable users of that information to make informed decisions. ASIC is responsible for administering and, where appropriate, enforcing the sustainability reporting requirements. Our focus is on ensuring users are provided with high-quality, decision- useful, climate-related financial disclosures that comply with the Corporations Act and AASB S2 Climate-related disclosures (AASB S2). This regulatory guide covers: • the preparation of the sustainability report; • specific issues about the contents of the sustainability report; • sustainability-related financial disclosures outside the sustainability report; and • ASIC’s administration of the sustainability reporting requirements, including our review of sustainability reports and the exercise of our relief powers. Sustainability reporting RG 280.1 Under Ch 2M of the Corporations Act, entities must prepare a sustainability report if they: (a) are required to prepare an annual financial report under Ch 2M; and (b) meet one of the sustainability reporting thresholds under s292A (see RG 280.32–RG 280.48). Note: In this guide, a ‘sustainability report’ refers to an annual sustainability report required under s292A. RG 280.2 Reporting entities may include: (a) companies, including registered corporations under the National Greenhouse and Energy Reporting Act 2007 (NGER Act); Page 5 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 5 (b) registered schemes; (c) registrable superannuation entities (RSEs); and (d) retail corporate collective investment vehicles (CCIVs). Note 1: In this guide, a ‘reporting entity’ refers to an entity that is required to prepare a sustainability report under s292A. Where a registered scheme is required to prepare a sustainability report under s292A, the responsible entity of the registered scheme is responsible for the performance of those obligations: s285(3). Where an RSE is required to prepare a sustainability report under s292A, the RSE licensee is responsible for the performance of those obligations: s285(3A) and s345AAA. Note 2: In this guide, an ‘RSE licensee’ has the same meaning given under s10 of the Superannuation Industry (Supervision) Act 1993 (SIS Act). RG 280.3 A reporting entity’s sustainability report for a financial year consists of: (a) climate statements; (b) notes to the climate statements; and (c) the directors’ declaration about the climate statements and the notes (directors’ declaration): see s296A. Note: For more information about notes to the climate statements, see RG 280.96– RG 280.97. For more information about the directors’ declaration, see RG 280.57– RG 280.60. RG 280.4 The climate statements are: (a) statements that are required by AASB S2 Climate-related disclosures (AASB S2), made by the Australian Accounting Standards Board (AASB) under s336A (see s296A(1)(a), s296A(2) and s296D); or (b) where s296B(1) applies, a statement that there are no material financial risks or opportunities relating to climate for the entity and a statement explaining how the entity determined that it has no material financial risks or opportunities relating to climate (see s296B(1), s296B(6) and RG 280.73–RG 280.77). RG 280.5 AASB S2 is based on IFRS S2 Climate-related disclosures (IFRS S2) and the parts of IFRS S1 General requirements for disclosure of sustainability- related financial information (IFRS S1) that are relevant for preparing climate-related financial disclosures. IFRS S1 and IFRS S2 have been issued by the International Sustainability Standards Board (ISSB). Note: AASB S1 General requirements for disclosure of sustainability-related financial information (AASB S1) has been issued by the AASB as a voluntary sustainability standard. In this guide, AASB S1 and AASB S2 are collectively referred to as ‘sustainability standards’. RG 280.6 Reporting entities must have the sustainability report audited in accordance with Div 3 of Pt 2M.3: see s301A. The audit requirements are being phased in between 1 January 2025 and 30 June 2030: see note 1 of RG 280.185. Note: The Australian Auditing and Assurance Standards Board (AUASB) has published a timetable (PDF 364 KB) for phasing in these auditing requirements. Page 6 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 6 RG 280.7 The sustainability report for a financial year must be lodged with ASIC no later than: (a) three months after the end of the relevant financial year—for reporting entities that are disclosing entities, RSEs and registered schemes; and (b) four months after the end of the relevant financial year—for all other reporting entities: see s319(3). Note: Any member of the public can search ASIC’s register to access a copy of a sustainability report lodged by a reporting entity. RG 280.8 If the reporting entity is a company, disclosing entity, RSE or registered scheme, it must provide the sustainability report and the auditor’s report on the sustainability report to members: see s314(1)(a) and s314AA(1). Note 1: For RSEs, see the definition of ‘member’ under s1017BB(6). For all other reporting entities, see the definition of ‘member’ under s9. Note 2: If a reporting entity is a company limited by guarantee, and a member elects to receive a copy of the company’s sustainability report or the auditor’s report on the sustainability report for a financial year, the company must provide a copy of these reports to the member: see s314(1AAA), s316(5) and s316A. RG 280.9 If the reporting entity is a public company, it must lay the sustainability report and the auditor’s report on the sustainability report before members at the reporting entity’s annual general meeting (AGM): see Note 1 to s250N(3). Note: In this guide, ‘AGM’ refers to an annual general meeting of a company that s250N requires to be held. RG 280.10 If a reporting entity is not required to provide the sustainability report to members, it must ensure that the sustainability report is publicly available on its website on and after the day on which the sustainability report is lodged with ASIC: see s316B(1). Objective of sustainability reporting RG 280.11 The objective of sustainability reporting is to improve the quality, consistency and comparability of climate-related financial disclosures of reporting entities. This facilitates confident and informed decision making by investors and other users of that information. Note: The sustainability reporting requirements in the Corporations Act have been designed to establish an ‘enduring framework for future sustainability-related financial disclosures’. At present the only mandatory component of a sustainability report is climate-related financial disclosures: see paragraph 4.12 of the Explanatory Memorandum to the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (FMI Bill). Page 7 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 7 RG 280.12 This objective is broadly reflected in s224 of the Australian Securities and Investments Commission Act 2001 (ASIC Act). It outlines that an objective of the sustainability standards is to facilitate: (a) financial and other related information that (among other things) is relevant and reliable, facilitates comparability, is readily understandable, and allows users to make and evaluate decisions about allocating scarce resources (see s224(a) of the ASIC Act); and (b) the Australian economy, by reducing the cost of capital, enabling reporting entities to compete effectively overseas, and having sustainability standards that are clearly stated and easy to understand (see s224(b) of the ASIC Act). RG 280.13 This objective is also reflected in paragraph BC3 of the Basis for Conclusions accompanying AASB S2 and paragraphs 4.9 and 4.10 of the Explanatory Memorandum to the FMI Bill. RG 280.14 AASB S2 was developed after consultation with stakeholders, including both preparers and users of the relevant information. RG 280.15 AASB S2 requires reporting entities to disclose information about climate- related risks and opportunities (if material) that is useful for primary users of general purpose financial reports. Appendix A of AASB S2 defines these primary users as ‘existing and potential investors, lenders and other creditors’. Note: Sections 296B(1) and 296D(1)(a) refer to the concept of ‘material financial risks or opportunities relating to climate’. These are to be determined in accordance with AASB S2: see s296B(6) and s296D(2). Under AASB S2, an entity must disclose material information about the climate-related risks or opportunities that could reasonably be expected to affect the entity’s prospects. The information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports: see paragraphs 17–19, B13–B19 and B21–B37 of Appendix D of AASB S2. RG 280.16 The Explanatory Memorandum to the FMI Bill at paragraph 4.4 also states that: [b]usinesses, investors, regulators and the public will have a clear and common understanding of obligations for entities to disclose climate- related financial risks and opportunities, in line with international standards. Climate-related risks and opportunities RG 280.17 Climate change, and the response of governments, businesses and societies, may give rise to climate-related risks but may also present climate-related opportunities: see Table 1. Page 8 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 8 Table 1: Climate-related risks and opportunities Climate-related risks and opportunities Definition in Appendix A of AASB S2 Climate-related physical risks Risks resulting from climate change that can be event-driven (acute physical risk) or from longer term shifts in climatic patterns (chronic physical risk). Acute physical risks arise from weather-related events such as storms, floods, droughts or heatwaves, which are increasing in severity and frequency. Chronic physical risks arise from longer-term shifts in climatic patterns including changes in precipitation and temperature, which could lead to sea-level rise, reduced water availability, biodiversity loss and changes in soil productivity. These risks could carry financial implications for an entity, such as costs, resulting from direct damage to assets or indirect effects of supply chain disruption. The entity’s financial performance could also be affected by changes in water availability, sourcing and quality; and extreme temperature changes affecting the entity’s premises, operations, supply chains, transportation needs and employee health and safety. Climate-related transition risks Risks that arise from efforts to transition to a lower-carbon economy. Transition risks include policy, legal, technological, market and reputational risks. These risks could carry financial implications for an entity, such as increased operating costs or asset impairment due to new or amended climate-related regulations. The entity’s financial performance could also be affected by shifting consumer demands and the development and deployment of new technology. Climate-related opportunities The potential positive effects arising from climate change for an entity. Efforts to mitigate and adapt to climate change can produce climate-related opportunities for an entity. RG 280.18 Climate change also presents systemic risks (both physical and transitional) to the financial system that regulators of financial stability risks (such as prudential regulators and central banks) need to manage. Note: These financial stability risks were highlighted by the G20 Financial Stability Board at a meeting on 24 September 2015, when it proposed a Taskforce on Climate- related Financial Disclosures, a precursor to the ISSB. Consideration of these financial stability risks has contributed to the demand for consistent and comparable climate- related financial disclosures. See also paragraph 4.8 of the Explanatory Memorandum to the FMI Bill. ASIC’s role RG 280.19 ASIC is responsible for administering, and where appropriate, enforcing, the sustainability reporting requirements under the Corporations Act. RG 280.20 In administering these sustainability reporting requirements, our focus is on fostering high-quality, consistent and comparable climate-related financial disclosures to enable users of that information to make informed decisions. This facilitates fair and efficient capital markets. Page 9 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 9 RG 280.21 Our role does not generally extend to assessing the ambition or merit of an entity’s climate-related strategy or targets, provided these comply with the entity’s disclosure obligations under the Corporations Act and any other laws that ASIC administers. These are generally strategic matters to be determined by an entity’s directors and management acting in the entity’s best interests. RG 280.22 Users of the sustainability report will in turn assess these matters in their own decision making with respect to the entity, such as in decisions to invest in or lend to, or continue to invest in or lend to, an entity, and/or decisions in relation to the exercise of voting rights in that entity. RG 280.23 ASIC recognises that there will be a period of transition as reporting entities continue to build their capability, as reflected in the phasing in of requirements and the temporary operation of modified liability settings. Accordingly, we will take a proportionate and pragmatic approach to supervision and enforcement as the requirements are being phased in: see Table 2 and RG 280.152–RG 280.155. RG 280.24 ASIC has the discretionary power to grant relief to a reporting entity from the requirement to comply with its sustainability reporting and audit obligations under Pt 2M.2, Pt 2M.3 and/or Pt 2M.4 (other than Div 4), provided the relevant jurisdictional threshold in s342(1) is met: see RG 280.156– RG 280.183. RG 280.25 ASIC can also use its directions power if we consider that a statement made in a sustainability report is incorrect, incomplete or misleading in any way: see s296E(1) and RG 280.204–RG 280.214. Outline of regulatory guide RG 280.26 This regulatory guide addresses: (a) at Section B, preparing the sustainability report, including: (i) the entities that must prepare a report and when; (ii) the obligation to keep sustainability records; (iii) directors’ duties; and (iv) the temporary modified liability settings; (b) at Section C, the content of a sustainability report, including: (i) statements of no material financial risks or opportunities relating to climate under s296B(1); (ii) statements with forward-looking climate information; (iii) cross-referencing other documents in a sustainability report; Page 10 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 10 (iv) labelling of sustainability-related information in sustainability reports; (v) notes to the climate statements; (vi) climate-related scenario analysis; (vii) scope 3 greenhouse gas emissions; and (viii) the proportionality mechanisms and exceptions under AASB S2; (c) at Section D, how the sustainability reporting requirements interact with other reporting obligations and disclosures, including: (i) the operating and financial review (OFR) requirement under s299A; (ii) disclosure documents under Ch 6D; and (iii) Product Disclosure Statements (PDS) under Pt 7.9; (d) at Section E, our role in administering the sustainability reporting requirements, including our approach to: (i) supervision and enforcement during the early years of sustainability reporting; (ii) relief from the sustainability reporting and audit requirements; (iii) reviewing sustainability reports; and (iv) exercising our directions power under s296E. RG 280.27 This guide does not purport to provide exhaustive guidance on the preparation of, and content required in, a sustainability report. It explains our interpretation of the sustainability reporting requirements under the Corporations Act and how we will administer and enforce the sustainability reporting requirements. RG 280.28 Preparers and users of sustainability reports should also refer to guidance from other sources. For example: (a) Appendix B of AASB S2 provides guidance on the application of the core content requirements in AASB S2; (b) the ISSB has published accompanying guidance and education materials to support the application of IFRS S2. The accompanying guidance is accessible after signing in as a registered user on the IFRS registration webpage. These may also be useful for reporting entities in complying with AASB S2; and (c) the AASB and AUASB are considering developing guidance and education materials in relation to the sustainability reporting and assurance requirements. Page 11 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 11 RG 280.29 Reporting entities should also, where required, consider seeking professional advice to ensure compliance with the sustainability reporting requirements under the Corporations Act. RG 280.30 This guide is primarily for preparers of sustainability reports and their advisers. This includes current reporting entities and those entities required to report in the future. The guide may also be relevant for: (a) users of sustainability reports and their advisers; (b) non-reporting entities that wish to disclose sustainability-related financial information, such as climate-related financial information, to stakeholders; and (c) entities raising capital through the issue or sale of securities under Ch 6D, preparing disclosures for the purposes of complying with Ch 6 or Pt 5.1, or preparing disclosures for the purposes of complying with Pt 7.9. Note: Reporting entities may ask for information from entities within their value chain, including small businesses and farmers. These entities should refer to ASIC’s website about sustainability reporting and what it means for them. RG 280.31 The sustainability reporting requirements intersect with other key requirements in the Corporations Act—many of which are covered by existing regulatory guidance. This regulatory guide should be considered together with any other relevant regulatory guidance, as indicated throughout: see also the ‘Related information’ section at the end of this guide. Page 12 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 12 B Preparing the sustainability report Key points Under Ch 2M, entities must prepare a sustainability report and keep sustainability records if they: • are required to prepare an annual financial report under Ch 2M; and • meet one of the sustainability reporting thresholds under s292A. Entities that are not required to prepare a sustainability report or keep sustainability records include: • foreign companies registered under Div 2 of Pt 5B.2 and entities incorporated in a foreign jurisdiction; • small proprietary companies with no Ch 2M reporting obligations; • other entities that are not subject to Ch 2M, such as registered charities; and • entities that have obtained relief from the requirement to prepare an annual financial report for the relevant financial year. In discharging their duty of care and diligence, directors of reporting entities should consider the extent to which climate-related risks could reasonably be expected to affect the reporting entity’s prospects. For sustainability reports prepared for the financial years commencing between 1 January 2025 and 31 December 2027, modified liability settings apply, in specific circumstances, to statements made about: • scope 3 greenhouse gas emissions (including financed emissions); • scenario analysis; and • transition plans. For sustainability reports prepared for a financial year commencing between 1 January 2025 and 31 December 2025, modified liability settings apply, in specific circumstances, to statements relating to climate that, at the time they are made, are about the future. Who must prepare a sustainability report RG 280.32 Entities must prepare a sustainability report if they are required to prepare an annual financial report under Ch 2M (Ch 2M entities) and if they meet one of the following sustainability reporting thresholds under s292A: (a) the corporate size threshold—the entity (and the entities it controls if any) meets two of the three corporate size thresholds for consolidated revenue, value of consolidated gross assets or the number of employees under s292A(3); (b) the emissions threshold—the entity is a registered corporation that has emissions reporting obligations under the NGER Act (see s292A(5)); or Page 13 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 13 (c) the value of assets threshold—the entity is a registered scheme, RSE or retail CCIV and it (and the entities it controls if any) meets the criteria for the value of assets under s292A(6). Note 1: In this guide, ‘Ch 2M entities’ are entities that are required to prepare an annual financial report for a financial year under 292. Note 2: For detailed information about the sustainability reporting thresholds that may apply, see Table 2. RG 280.33 Table 2 summarises the commencement date of sustainability reporting requirements for entities meeting various thresholds: see s1707B. Table 2: Commencement of sustainability reporting requirements Commencement date Relevant thresholds For annual reporting periods commencing on or from 1 January 2025 to 30 June 2026 (Group 1) Entities, other than registered schemes, RSEs or retail CCIVs that meet at least two of the following three criteria:  the consolidated revenue of the entity (and the entities it controls) is equal to or greater than $500 million;  the value of the consolidated gross assets at the end of the financial year of the entity (and the entities it controls) is equal to or greater than $1 billion; or  the entity (and the entities it controls) has, at the end of the financial year, 500 or more employees. Entities, other than registered schemes, RSEs or retail CCIVs, that:  are registered corporations under the NGER Act or are required to make an application to be registered under s12(1) of the NGER Act; and  are a member of a group (as defined in s8 of the NGER Act) that meets, for a financial year, the threshold in s13(1)(a) of the NGER Act. For annual reporting periods commencing on or from 1 July 2026 to 30 June 2027 (Group 2) Entities that meet at least two of the following three criteria:  the consolidated revenue of the entity (and the entities it controls) is equal to or greater than $200 million;  the value of the consolidated gross assets at the end of the financial year of the entity (and the entities it controls) is equal to or greater than $500 million; or  the entity (and the entities it controls) has, at the end of the financial year, 250 or more employees. Entities that are registered corporations under the NGER Act or are required to make an application to be registered under s12(1) of the NGER Act. Registered schemes, RSEs and retail CCIVs where the value of assets at the end of the financial year of the entity (and the entities it controls) is equal to or greater than $5 billion. Note: For retail CCIVs, the $5 billion threshold applies to the whole CCIV (i.e. the sum of the value of assets at the end of the financial year of all sub-funds). For annual reporting periods commencing on or from 1 July 2027 (Group 3) Entities, including registered schemes, RSEs or retail CCIVs, which meet at least two of the following three criteria:  the consolidated revenue of the entity (and the entities it controls) is equal to or greater than $50 million;  the value of the consolidated gross assets at the end of the financial year of the entity (and the entities it controls) is equal to or greater than $25 million; or  the entity (and the entities it controls) has, at the end of the financial year, 100 or more employees. Page 14 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 14 RG 280.34 The sustainability reporting requirements crystallise at the end of the financial year. Entities should establish adequate systems to assess whether they may be required to prepare a sustainability report, even if they do not meet the sustainability reporting thresholds at the commencement of that financial year. For example, an acquisition may complete, a corporate restructure may occur, or market or economic conditions may shift, resulting in a change to the entity’s reporting status. Note: The systems that an entity should establish to assess whether the entity may be required to prepare a sustainability report for a financial year will depend on the entity’s size and circumstances and the likelihood that the entity will meet a sustainability reporting threshold for that financial year. Determining sustainability reporting thresholds RSEs, registered schemes and retail CCIVs RG 280.35 A sustainability report is required to be prepared for a financial year by: (a) an RSE licensee on behalf of an RSE, if the RSE licensee is required to prepare an annual financial report under Ch 2M on behalf of the RSE for a financial year and the RSE satisfies any of the sustainability reporting thresholds (see s285(3A) and s345AAA); (b) a responsible entity on behalf of a registered scheme, if the responsible entity is required to prepare an annual financial report under Ch 2M on behalf of the registered scheme for a financial year and the registered scheme satisfies any of the sustainability reporting thresholds (see s285(3)); and (c) a retail CCIV on behalf of each relevant sub-fund, if the retail CCIV is required to prepare an annual financial report under Ch 2M for a financial year and satisfies any of the sustainability reporting thresholds (see s1232C(1)(aa)). RG 280.36 Any of the sustainability reporting thresholds may apply to an RSE, registered scheme or retail CCIV. The value of assets threshold only applies to RSEs, registered schemes and retail CCIVs. However, the corporate size threshold and the emissions threshold may also apply independently to RSEs, registered schemes and retail CCIVs. Note: Paragraph 4.44 of the Explanatory Memorandum to the FMI Bill states that an RSE, registered scheme or retail CCIV ‘that meets the corporate size thresholds in s292A(3) must prepare a sustainability report, even if it does not meet the requirements of s292A(5) (regarding NGER registered corporations) or 292A(6) (regarding asset thresholds)’. Page 15 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 15 RG 280.37 RSEs, registered schemes and retail CCIVs may be required to prepare a sustainability report for the financial year commencing from: (a) 1 July 2026—if they satisfy the value of assets threshold under s292A(6), the emissions threshold under s292A(5), or the corporate size threshold in s296B(2) for ‘Group 2’ entities (see Table 2); or (b) 1 July 2027—if they do not satisfy the value of assets threshold but satisfy the corporate size threshold under s292A(3) for ‘Group 3’ entities (see Table 2). Note: RSEs, registered schemes and retail CCIVs are not part of the ‘Group 1’ reporting cohort: see Table 2. Companies and other reporting entities RG 280.38 Ch 2M entities that are not RSEs, registered schemes or retail CCIVs must prepare a sustainability report if they satisfy either the corporate size threshold or emissions threshold: see s292A(3) and s292A(5). RG 280.39 These Ch 2M entities may include companies, authorised deposit-taking institutions and investor-directed portfolio service providers. They may also include RSE licensees, responsible entities, corporate directors of retail CCIVs and trustees of unregistered managed investment schemes that are required to prepare a sustainability report in their own capacity. Note: RSE licensees and responsible entities of registered schemes may be required to prepare a sustainability report on behalf of an RSE or registered scheme respectively: see RG 280.35. However, as may be the case for trustees of unregistered schemes, RSE licensees and responsible entities may also be required to prepare a sustainability report in their own capacity, if they are required to prepare an annual financial report under Ch 2M and meet either the corporate size threshold or emissions threshold. RG 280.40 The value of assets threshold does not apply to these Ch 2M entities: see RG 280.32(c) and Table 2. This is because the value of assets threshold applies exclusively to entities that are RSEs, registered schemes or retail CCIVs: see s292A(6)(a). Control RG 280.41 An entity must prepare a sustainability report if it is a Ch 2M entity, and the entity and any entities it controls satisfies either the corporate size threshold or value of assets threshold. RG 280.42 In determining whether an entity controls another under s292A(3) or s292A(6), AASB 10 Consolidated financial statements (AASB 10) should be considered. These are the accounting standards that determine this matter: see s292A(7)(a). Page 16 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 16 Revenue, assets and employees RG 280.43 In determining whether a Ch 2M entity has satisfied the corporate size threshold: (a) an entity should refer to the financial statements prepared in accordance with Ch 2M. If the entity has controlled entities, the entity should refer to the consolidated financial statements prepared in accordance with AASB 10; (b) total assets should be as reported in the standalone statement of financial position or consolidated statement of financial position (as appropriate); Note: This is the same position for calculating assets under the value of assets threshold. (c) revenue should be determined by reference to the definitions of income and revenue provided in AASB 15 Revenue from contracts with customers (AASB 15). Depending on the business model, entities may also consider other accounting standards that give rise to the recognition of revenue, such as AASB 9 Financial instruments (AASB 9), AASB 11 Joint arrangements (AASB 11), AASB 17 Insurance contracts (AASB 17), AASB 140 Investment property (AASB 140) and AASB 141 Agriculture (AASB 141); and (d) it may be helpful as a starting point, in calculating the number of employees, to refer to paragraph (a) in the definition of ‘employees and others providing similar services’ contained in Appendix A of AASB 2 Share-based payment (AASB 2). Note: The concepts of ‘revenue’, ‘assets’ and ‘employees’ have the same meaning as the equivalent concepts in s45A(3). These same concepts are used to determine whether a company is a large proprietary company under s45A(3). Consolidated entities or group members of stapled groups RG 280.44 In certain circumstances, a subsidiary that is part of a consolidated entity or an entity that is part of a stapled group is not required to prepare a sustainability report. This applies when: (a) a parent entity elects to prepare a sustainability report for the consolidated entity for the financial year and is also required by the accounting standards to prepare financial statements for the consolidated entity for the financial year (see s292A(2)); or (b) a stapled entity in the stapled group prepares a sustainability report on behalf of the stapled group relying on ASIC Corporations (Reporting by Stapled Entities) Instrument 2023/673. Note: See Section E on sustainability reporting relief for further information on RG 280.44(b) and the relief granted to facilitate sustainability reporting for stapled entities. Page 17 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 17 RG 280.45 For the purposes of Ch 2M and s292A(2), the accounting standards only require a parent entity to prepare financial statements for the consolidated entity for the financial year if it must prepare an annual financial report under s292 and s295(1): see also s295(2)(b). Accordingly, the parent entity must be a Ch 2M entity that is required to prepare consolidated financial statements to have the option of preparing a consolidated sustainability report under s292A(2). RG 280.46 For example, a foreign parent entity does not have the option of preparing a consolidated sustainability report under s292A(2) on behalf of the consolidated entity for a financial year. Australian subsidiaries of the foreign parent that are reporting entities must still prepare an individual sustainability report under s292A. This is because the foreign parent is not a Ch 2M entity and is not required under the accounting standards to prepare financial statements for the consolidated entity for the financial year for the purposes of Ch 2M. Note: Section E provides guidance on how ASIC exercises its power to grant sustainability reporting relief. The section includes guidance for reporting entities seeking consolidated sustainability reporting relief. Non-reporting entities RG 280.47 Ch 2M entities that do not meet the sustainability reporting thresholds under s292A are not required to prepare a sustainability report. RG 280.48 Entities that do not have to prepare an annual financial report under Ch 2M are also not required to prepare a sustainability report. This includes: (a) foreign companies registered under Div 2 of Pt 5B.2 of the Corporations Act and entities incorporated in a foreign jurisdiction; (b) small proprietary companies with no Ch 2M reporting obligations; (c) registered charities that are not required to prepare an annual financial report under Ch 2M. These entities have separate financial reporting obligations under the Australian Charities and Not-for-profits Commission Act 2012; and (d) entities that rely on relief granted by ASIC from the requirement to prepare an annual financial report under Ch 2M for the relevant financial year. Note: This is because only entities that are required to prepare an annual financial report under Ch 2M are required to prepare a sustainability report: see s292A(1)(a). Page 18 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 18 Obligation to keep sustainability records RG 280.49 Entities required to prepare a sustainability report for a financial year must keep written sustainability records: see s285(1)(b) and s286A. Note 1: Sustainability records must be retained for seven years after the sustainability report to which they relate is completed: see s286A(2). Note 2: For entities required to prepare a sustainability report for a financial year, failure to keep sustainability records is a strict liability offence: see s286A(4). Note 3: The sustainability reporting requirements crystallise at the end of the financial year: see RG 280.34. RG 280.50 These are documents and working papers that explain the methods, assumptions and evidence from which the sustainability report (apart from the directors’ declaration) is made up: see definition of ‘sustainability records’ in s9 of the Corporations Act. RG 280.51 Sustainability records may include: (a) minutes of board or committee meetings; (b) internal reports or analysis; (c) reports commissioned by third parties, such as consultants or experts; (d) greenhouse gas emissions inventories; (e) source documentation and extracts from the general ledger evidencing climate-related impacts on the reporting entity’s financial position, performance and cash flows for the reporting period; (f) working papers or documents evidencing inputs for, and assumptions used in, the sustainability report; and (g) any assessment undertaken for the purposes of making the statement under s296B(1). Note: These are examples only of sustainability records that reporting entities may keep. The types of sustainability records that a reporting entity is required to keep will depend on the nature of the reporting entity and their broader circumstances. RG 280.52 Reporting entities should ensure that the sustainability records: (a) support the reporting entity’s climate-related financial disclosures relating to governance, strategy, risk management and metrics and targets. This is the core content required under s296D(1) of the Corporations Act; Note: It should also include sustainability records that support any climate-related financial information required by s296C(1)(a) and s296D(1) that has been included by cross-reference in the sustainability report. This is because this information is taken to become part of the complete set of climate-related financial disclosures: see paragraphs 63 and B46 of Appendix D of AASB S2. (b) include any financial records necessary to support the reporting entity’s disclosures described at RG 280.52(a); Page 19 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 19 (c) are available on request by ASIC to support a statement made in the sustainability report; and Note: ASIC may use its compulsory information-gathering powers to obtain sustainability records for regulatory and enforcement purposes. If sustainability records are not provided, we may conclude that the reporting entity has not undertaken the work required to support that statement and the statement is unsubstantiated (in the absence of evidence to the contrary). (d) are provided to auditors promptly, if requested to inform the auditor’s report on the sustainability report. RG 280.53 Reporting entities must comply with the requirements for keeping, and providing copies of, sustainability records kept in electronic form. For example: (a) if sustainability records about particular matters are kept outside Australia, sufficient written information about those matters must be kept in Australia to enable the substantive provisions of the sustainability report to be prepared (see s289A(1)–(2)); (b) an entity may store sustainability records electronically, if they are capable at any time of being reproduced in written form or a reproduction is kept in written form approved by ASIC (see s9 and s1306(1)–(2)); and (c) electronic records must be convertible into hard copy and made available within a reasonable time to a person who is entitled to inspect the records (see s288(1)). Directors’ duties Duty of care and diligence RG 280.54 Directors have a duty to exercise their powers with the care and diligence that a reasonable person would exercise in the circumstances. Note 1: In this guide, ‘directors’ refers to directors of companies, directors of responsible entities, directors of retail CCIVs and directors of RSE licensees. Note 2: See the specific obligations in s180(1) of the Corporations Act for directors of companies, s601FD(1)(b) of the Corporations Act for directors of responsible entities, s180(1) and s1224D(2)(a) of the Corporations Act for directors of retail CCIVs, and s52A(2)(b) of the SIS Act for directors of RSE licensees. Note 3: Directors of reporting entities also have other duties. For example, directors of companies also have a duty to act in good faith in the best interests of the corporation: see s181(1)(a) of the Corporations Act. Directors of RSE licensees (s52A(2)(c) of the SIS Act), directors of responsible entities (s601FD(1)(c) of the Corporations Act) and directors of retail CCIVs (s1224D(1)(b)–(c) of the Corporations Act) have a duty to act in the best financial interests of members. Page 20 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 20 RG 280.55 Directors of reporting entities should: (a) have an understanding about the reporting entity’s sustainability reporting obligations; (b) have an understanding about climate-related risks or opportunities that could reasonably be expected to affect the reporting entity’s prospects, including its access to cash flows, its access to finance and cost of capital over the short, medium and long term: see paragraph 2 of AASB S2; (c) require the establishing of systems that identify, assess and monitor any material financial risks and opportunities relating to climate (including any changes); (d) require the establishing of controls, policies and procedures for overseeing, managing and preparing the sustainability report. This may include identifying relevant business units and employees responsible for providing key inputs. It may also include identifying how climate- related financial information (including any climate-related data) is obtained and used to inform the disclosures in the sustainability report; (e) require the establishing of controls, policies and procedures for keeping sustainability records; and (f) apply a critical lens to the disclosures proposed in the sustainability report, such as questioning the appropriateness or completeness of methodologies, inputs and assumptions used to support disclosures, the extent that there may be any material omissions having regard to their knowledge of the reporting entity’s business, whether the disclosures have been properly characterised, and whether additional information should be disclosed. Note 1: For reporting entities that are RSEs, registered schemes or retail CCIVs, the directors of the entity required to prepare the sustainability report on their behalf should consider the matters described in this paragraph: see also RG 280.35. Note 2: Information Sheet 183 Directors and financial reporting (INFO 183) contains principles for directors in relation to financial reporting. INFO 183 contains similar principles that may be helpful for directors of reporting entities, including that directors should apply an inquiring mind to the information proposed in the annual financial report. Note 3: Entities regulated by the Australian Prudential Regulation Authority should also refer to Prudential Practice Guide CPG 229 Climate change financial risks (CPG 229). RG 280.56 Directors of reporting entities may rely on the special knowledge or expertise of others in relation to sustainability reporting. This might include experts, advisers and other suitably qualified persons (both internal and external). However, directors still need to make an independent assessment of the information or advice provided, using their own skills and judgement, and rely on such information or advice available at the time in good faith: see s189(b). Page 21 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 21 Directors’ declarations RG 280.57 A sustainability report must include the directors’ declaration about climate statements and the notes. Note 1: The directors providing the directors’ declaration are those of the entity that is required to prepare the sustainability report. For RSEs, registered schemes and retail CCIVs, these are the directors of the entity required to prepare the sustainability report on behalf of the RSE, registered scheme or retail CCIV: see also RG 280.35. Note 2: For more information about notes to the climate statements, see RG 280.96– RG 280.97. RG 280.58 For the financial years commencing between 1 January 2025 and 31 December 2027, directors of reporting entities are required to declare that, in their opinion, the entity has taken reasonable steps to ensure that the sustainability report (other than the directors’ declaration) is in accordance with the Corporations Act and AASB S2: see s296A(6) as modified by s1707C(2). This modified declaration reflects that: (a) the sophistication and maturity of a reporting entity’s controls, policies, procedures and systems for sustainability reporting are expected to develop over time; and (b) directors are expected to develop their understanding, experience and capabilities in relation to sustainability reporting over time. RG 280.59 For the financial years commencing on or after 1 January 2028, directors of reporting entities are required to declare whether, in the directors’ opinion, the sustainability report (other than the directors’ declaration) is in accordance with the Corporations Act (including s296C and s296D) and AASB S2: see s296A(6). Note: This directors’ declaration aligns more closely with the directors’ declaration in relation to the financial statements at s295(4)(d)(i). RG 280.60 The directors’ declaration must be made in accordance with a resolution of the directors, specify the date on which the declaration is made, and be signed by a director: see s296A(7). Modified liability settings RG 280.61 Under the modified liability settings, no legal action other than criminal action, or action by ASIC, can be brought against a person in relation to ‘protected statements’ made in: (a) the sustainability report; or (b) the auditor’s report on the sustainability report. Note: In this guide, a ‘person’ refers to a body politic or corporate as well as an individual: see s2C of the Acts Interpretation Act 1901. These include directors of entities that have prepared sustainability reports under s292A. Page 22 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 22 RG 280.62 For example, an investor may not bring a civil action alleging that a protected statement in a sustainability report is misleading or deceptive. RG 280.63 Table 3 sets out the types of protected statements and their modified liability periods. Table 3: Protected statements Protected statement Location and purpose of statement Modified liability period A statement relating to climate and, at the time it is made, is about the future. Statement is made in:  the sustainability report for the purposes of complying with a sustainability standard; or  the auditor’s report for the purposes of complying with the Corporations Act or the auditing standards. Report prepared for financial years commencing between 1 January 2025 and 31 December 2025. A statement made about:  scope 3 greenhouse gas emissions;  scenario analysis; or  a transition plan. Statement is made in:  the sustainability report for the purposes of complying with a sustainability standard; or  the auditor’s report for the purposes of complying with the Corporations Act or the auditing standards. Report prepared for financial years commencing between 1 January 2025 and 31 December 2027. Note: For the definitions of items used in Table 3, see the Key terms. See also s1707C(1) and s1707D(3)–(4). RG 280.64 Protected statements relating to climate, that at the time they are made are about the future, are likely to include those that are described at RG 280.79(a)–RG 280.79(b) and RG 280.79(d). RG 280.65 Protected statements about scope 3 greenhouse gas emissions, scenario analysis and transition plans are likely to include statements about the inputs and assumptions that inform these disclosures. Note 1: In this guide, ‘scope 3 greenhouse gas emissions’ refers to indirect greenhouse gas emissions (not included in scope 2 greenhouse gas emissions) that occur in the value chain of an entity, including both upstream and downstream emissions. Scope 3 greenhouse gas emissions include the scope 3 categories in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011): see Appendix A of AASB S2. Note 2: In this guide, ‘scenario analysis’ refers to a process for identifying and assessing a potential range of outcomes of future events under conditions of uncertainty: see Appendix A of AASB S1. Note 3: In this guide, ‘transition plan’ refers to an aspect of an entity’s overall strategy that lays out the entity’s targets, actions or resources for its transition towards a lower- carbon economy, including actions such as reducing its greenhouse gas emissions: see Appendix A of AASB S2. Page 23 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 23 RG 280.66 Statements in a sustainability report are only protected statements if they are made for the purposes of complying with a sustainability standard: see Table 3. If a reporting entity discloses sustainability-related information in the sustainability report beyond what is required under the sustainability standards, the modified liability settings will not apply to those voluntary sustainability-related disclosures. Note: For example, the reporting entity discloses voluntary sustainability-related information required under another sustainability reporting standard or framework. Protected statements outside the sustainability report or auditor’s report on the review or audit of the sustainability report RG 280.67 The modified liability settings also apply when a statement is: (a) required to be made under a Commonwealth law; and (b) the same as a protected statement, or differs from a protected statement only in so far as it contains updates or corrections to the protected statement (see s1707D(1)(b)). RG 280.68 Examples of when a protected statement may be required to be made under a Commonwealth law include: (a) a protected statement, and any updated or corrected version of the protected statement, that is required to be disclosed by a reporting entity in compliance with its continuous disclosure obligations under s674 and s675; (b) a protected statement that is required to be included in the OFR under s299A(1); (c) a protected statement that is required to be included in a disclosure document, such as under s710; (d) a protected statement that is required to be included in a PDS, such as under s1013D or s1013E. For example, where a financial product has an investment component, a protected statement may be relevant to the environmental considerations taken into account in the selection, retention or realisation of the investment (see s1013D(1)(l)); and (e) a protected statement that is required to be updated or corrected under a direction given by ASIC under s296E(1)(g). RG 280.69 The modified liability settings do not extend to statements made outside of a sustainability report where: (a) the statement is made voluntarily. For example, where a protected statement is reproduced in an investor presentation or in promotional material, it will not be covered by the modified liability settings, unless that disclosure is required under a Commonwealth law; Page 24 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 24 (b) the statement is included by cross-reference in the sustainability report. This is because the statement is made in another report prepared by the reporting entity and has only been included by cross-reference in the sustainability report: see also RG 280.86–RG 280.88; (c) the statement is a summary of the protected statement or expands on the content of a protected statement. The modified liability settings only apply to a disclosure required under a Commonwealth law that is the same as a protected statement (i.e. a reproduction of the protected statement); or (d) the statement comprises updates or corrections to a protected statement, unless those updates or corrections are included in a revised version of a protected statement that is required to be made under a Commonwealth law. Page 25 REGULATORY GUIDE 280: Sustainability reporting © Australian Securities and Investments Commission March 2025 Page 25 C Content required in the sustainability report Key points Clim