The Australian Securities and Investments Commission (ASIC) has released its early observations on the country’s first mandatory climate risk disclosures, simultaneously naming sustainability reporting as a primary regulatory focus area for the 2026–27 financial year.
The corporate watchdog welcomed the initial submissions under Australia’s compulsory sustainability reporting regime, which commenced in 2025. As of early May 2026, 259 sustainability reports had been lodged for the financial year ending 31 December 2025, comprising 34 listed and 225 unlisted entities. According to ASIC data, the top sectors leading these initial disclosures include mining, construction, financial services, oil and gas, and electricity distribution.
Regulatory crackdown on non-compliant disclaimers
While ASIC reported an overall increase in the quantity and quality of climate-related financial information compared to previous voluntary disclosures, it explicitly warned entities against using non-compliant legal language.
The regulator stated that disclaimers conflicting with the statutory framework and objectives of Chapter 2M sustainability reporting are not permitted, noting that such clauses risk confusing or misleading investors.
Furthermore, ASIC reminded entities that their reporting must comply strictly with the Australian Accounting Standards Board (AASB) S2 Climate-related Disclosures standard. This includes:
- Utilising “reasonable and supportable” information covering past events, current conditions, and forecast future conditions.
- Providing clear, effective disclosure of relevant judgements, assumptions, and areas of measurement uncertainty.
- Ensuring additional climate-related information does not obscure material financial data.
- Accounting for legally mandated greenhouse gas emissions targets, such as those under the Safeguard Mechanism, when defining “climate-related targets.”
Framework administration to continue amid federal review
The early observations have been published to assist entities facing the upcoming 30 June reporting deadline. In tandem, ASIC’s newly outlined surveillance priorities for FY 2026–27 confirm that the administration of the mandatory climate reporting framework will remain a core focus, alongside traditional financial reporting and audit metrics.
The regulatory push comes despite the Federal Government’s recent Budget announcement proposing a consultation process to reduce corporate reporting burdens. ASIC confirmed it will participate in the consultation but emphasized that enforcement and administration of the current framework will proceed without interruption.
The regulator’s immediate supervision will remain focused on the sustainability reports submitted by the largest “Group 1” entities, while concurrently engaging with major audit firms to evaluate emerging climate assurance methodologies.
