ASIC consults on guidance for carbon markets

The corporate regulator will update guidance for carbon market participants in relation to the Australian financial services (AFS) licensing requirements.

The Australian Securities and Investments Commission (ASIC) proposed an overhaul of its regulatory guide to address the safeguard mechanism reforms.

The proposed updates, which address reforms to the financial services and markets section of the Corporations Act 2001, are open for feedback until 3 July 2024.

It also responds to changes in the regulatory landscape for carbon markets since May 2015, including Australian Carbon Credit Units (ACCUs).

An ASIC spokesperson told FS Sustainability:

"As the consultation paper (CP) notes, we are seeking feedback on proposed updates to Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets? (RG 236) to address the safeguard mechanism reforms. The proposed updates also address changes that have occurred since RG 236 was last re-issued in May 2015, particularly in relation to Australian Carbon Credit Units (ACCUs).

"As background, the safeguard mechanism reforms commenced on 1 July 2023 and will allow the Clean Energy Regulator to issue a new type of carbon product- safeguard mechanism credit units (SMCs)-from January 2025. SMCs are a type of eligible international emissions unit (EIEU) and therefore regulated as a financial product under the Corporations Act 2001 (Corporations Act).

"We are proposing to update RG 236 to reflect the implications of legislative changes arising from the safeguard mechanism reforms that commenced last year."

Last week ASIC chair Joe Longo reinforced the watchdog's hardline stance and said compliance leads to more profitability.

ASIC has issued 17 civil penalty proceedings against greenwashing, including more than $230,000 of fines.