The Australian Securities and Investments Commission (ASIC), the country's financial regulator, recently unveiled a guide to clarify compliance requirements under mandatory reporting law. The guide is called Regulatory Guide 280 (RG 280) and is expected to work as a blueprint for companies required to disclose climate-related financial risks under the new mandatory sustainability reporting law. 

Private market firms, asset managers, and impact investors operating in Australia should carefully consider this guide, as it aims to promote greater transparency and potentially reshape investment strategies to align with sustainability goals.

Let’s explore the Regulatory Guide 280 released by ASIC in detail. 

About the Regulatory Guide 280

The Regulatory Guide 280, released under Chapter 2M of the Corporations Act 2001, establishes a framework for sustainability reporting, including climate-related financial information, for entities required to prepare annual financial reports. After extensive public consultation, ASIC reviewed stakeholder feedback on its November 2024 draft guide and released RG 280, providing updated guidance on climate scenario analysis, Scope 3 greenhouse gas emissions disclosure, and sustainability reporting thresholds.

‘The publication of RG 280 is a critical piece that supports implementing these sustainability reporting requirements passed by the Australian Parliament. We will continue to expand our broader suite of publications related to sustainability reporting over time as market practices evolve.’ said ASIC Commissioner Kate O’Rourke. 

Updates on the Regulatory Guide 280

Considering the feedback ASIC received on the draft from November, they have made many changes to it. Here are the key updates:

• The regulators added sections on climate scenario analysis and disclosing the Scope 3 greenhouse gas emissions.

• More specific guidance was included for directors of reporting entities. 

• Additional guidance on applying sustainability reporting thresholds was included. 

• Revised ASIC’s position on labeling of sustainability-related information in sustainability reports.
• Updated the guidelines on disclosing sustainability-related financial information outside of sustainability reports. 

The “pragmatic and proportionate” approach 

In the guide, ASIC has recognized that climate reporting requirements are complex, so it has adopted a “pragmatic and proportionate” approach to supervision in the initial years. This means the regulators will not immediately penalize the companies for mistakes. Instead, ASIC will take certain measures, like:

• Consider how they can support reporting entities through their guidance and continue to monitor practices. 

• After engaging with entities, if concerns remain, ASIC will allow them to make changes. 
• Prioritize enforcement investigations where they see serious misconduct of a reckless nature.

For more information, refer to the RG 280 guide and the sustainability reporting page on the ASIC website. 

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