On 1 January 2025, sustainability reporting in Australia underwent a significant upgrade. For organisations across the country, these new requirements marked a shift toward greater transparency and accountability. But what does it mean for your business? Let’s break it down.
Australia’s sustainability reporting framework is now in place following the climate-related financial disclosures legislation—Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024—which was passed in September 2024. The Act mandates relevant entities to disclose their climate-related plans, financial risks, and opportunities in accordance with the Australian Sustainability Reporting Standards (ASRS) developed by the Australian Accounting Standards Board (AASB).
The first ASRS were issued by the AASB in September 2024 and include:
- AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information– a voluntary Standard
- AASB S2 Climate-related Disclosures – a mandatory Standard.
These Standards are aligned internationally with the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, with minimal variations. Importantly, mandatory reporting of climate-related disclosures applies to financial years beginning on or after 1 January 2025 (or later) depending on applicability to the relevant criteria.
The new rules aren’t just about compliance; they’re about staying competitive. Investors, customers, and even employees are demanding greater transparency. They want to know that your business is future-proofed and committed to ethical practices. Falling short in these areas could mean losing out on funding, market share, or top talent.
Let’s not forget the regulatory stick. With Australia’s commitment to achieving net-zero emissions, these reporting standards are part of a broader push to hold businesses accountable. Non-compliance could lead to hefty fines or reputational damage. Are you prepared to meet these expectations head-on?
So, what should you be doing to adapt? First, familiarise yourself with the reporting requirements and frameworks, such as the AASB S1 and S2 Standards. If your business hasn’t already started tracking key sustainability metrics, now’s the time to get those systems in place.
Next, conduct a materiality assessment to identify which ESG issues are most relevant to your operations and stakeholders. This will help you prioritise actions and focus your reporting efforts where they matter most. Feeling overwhelmed? Partnering with sustainability consultants or industry experts can make the process less daunting.
Finally, don’t overlook the importance of communication. Your sustainability report isn’t just for regulators; it’s a chance to tell your story. Use it to showcase your progress, share your challenges, and engage with your audience. Transparency builds trust, and trust builds loyalty.
The clock is ticking for Australian businesses to fully integrate these new reporting standards. While the task may seem daunting, it’s also an opportunity—a chance to lead, innovate, and demonstrate your commitment to a sustainable future. Meeting these requirements isn’t just about avoiding penalties; it’s about positioning your business as a forward-thinking leader in your industry.
So, where does your business stand? Are you embracing the change, or are you waiting to play catch-up? The time to act was yesterday.
Copyright 2020 ARCH Artifex
