Greenwashing remains an enforcement priority, says ASIC

The country's financial services regulator unveils its three-pronged approach as sustainability reporting becomes a mandatory requirement for small to large Australian businesses - but it was its passing update on greenwashing as an enforcement priority that had everyone's attention at an industry conference.

ASIC commissioner Kate O'Rourke opened Day 2 of the RIAA Conference yesterday with a presentation on sustainability reporting disclosure requirements - particularly on climate reporting.

Last year, the law mandating climate reporting disclosures was passed. O'Rourke called it a once-in-a-generation change to financial reporting and disclosure standards in Australia.

"What they mean for reporting entities is very significant ... it's also really important for addressing the financial system's climate risk."

ASIC's three-level strategy is to provide regulatory guidance, the discretion to provide regulatory relief, where necessary; and to support 'capacity building' in the sector.

Under the current guidance, companies or reporting entities will now provide four reports to the regulator, namely its annual financial report, the directors report, the auditor's report and, from March 2026 next year for Group 1 entities, a sustainability report.

Under a phasing in system, Group 2 and Group 3 entities will submit their sustainability reports in July 2026 and July 2027 respectively.

In March this year, ASIC released a new regulatory guidance in sustainability reporting, RG280.

Outcomes from industry consultation

"There's some important new aspects of the framework for people to understand. We did receive 60 submissions, and we did make changes in response to that feedback," said O'Rourke.

Among the changes based on industry feedback are:

• a new section on climate-related scenario analysis
• a new section disclosing Scope 3 greenhouse gas emissions

ASIC also received comments that some companies want to report other sustainability-related information, not required by law, in the same document, rather than in multiple documents, to make it easier for investors.

"Where we've landed on that is we'll administer the laws on the basis that additional information can be included in the reports, provided it's clearly identified, and that the main information is not obscured."

If companies struggle to meet the imminent deadlines, O'Rourke said that ASIC has the power to grant relief in certain circumstances.

"However, we encourage you to apply early," she noted.

On capacity building, the regulator understands that smaller companies may be concerned about the compliance requirements on them under the new laws. ASIC is set to deliver a set of educational materials in conjunction with accounting standards body AASB to help this group better understand their reporting obligations.

Greenwashing is a separate issue, but remains a priority

"We are taking a pragmatic and proportionate approach in relation to new disclosure requirements. In contrast, our enforcement posture on greenwashing is a different one," said O'Rourke, stressing that greenwashing is a breach of long-standing and very well-established legal obligations.

Misleading and deceptive conduct by corporates, whether it's to do with sustainability or other business activities, will be pro-actively monitored by the regulator, and greenwashing is no different.

O'Rourke wrapped up her presentation by stressing that their focus is to help reporting entities to comply, and in the context of a three-year transition.

"High quality, consistent, comparable and compliant climate-related disclosures really matter. They're going to be critical to confident and informed participation of investors, and with that participation, we get market integrity."