Navigating ESG Reporting in Australia in 2025: ASIC, ASX, and Climate Risk Disclosures
- Gasilov Group
- Apr 16
- 4 min read
Australia’s regulatory and market expectations around ESG disclosure have shifted sharply in 2025. Businesses can no longer treat ESG as a compliance afterthought. With mounting investor pressure, sharper regulatory guidance, and rising litigation risks, ESG reporting has become a strategic issue at board level. Navigating it effectively now demands a deeper understanding of evolving expectations from ASIC, ASX, and climate-related financial disclosure frameworks.
Why ESG Reporting in Australia Has Reached a Turning Point
In March 2024, the Australian government confirmed its commitment to aligning corporate climate disclosures with international standards, particularly the ISSB’s IFRS S1 and S2 frameworks. These will become mandatory for large entities beginning in July 2025, with a phased rollout through 2027. Businesses captured under these rules must be prepared to disclose climate-related risks and opportunities, emissions (including Scope 3), and transition plans in a way that is decision-useful for investors.
In parallel, ASIC has reinforced its scrutiny of greenwashing. In its 2024 enforcement update, ASIC noted that misleading sustainability claims were a top priority, and it has already initiated proceedings against several firms under the Corporations Act. Meanwhile, ASX-listed companies are expected to align their reporting with investor expectations as outlined in ASX Corporate Governance Principles and Recommendations, particularly Principle 7 (recognising and managing risk). For firms seeking to raise capital or maintain investor confidence, ESG missteps are now costly.
Key Compliance Pressures and Strategic Considerations
Unlike voluntary ESG statements of the past, the new wave of disclosure is grounded in financial materiality. That means:
Climate risks must be embedded into financial reporting, not disclosed in standalone sustainability reports.
Scenario analysis and forward-looking metrics are no longer optional for larger entities. Investors want clarity on how climate risks affect valuation, strategy, and resilience.
Scope 3 emissions, including value chain impacts, are a central concern. Firms with complex supplier networks or international exposure must begin mapping upstream and downstream emissions now.
The Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) have also signaled a move toward requiring assurance over ESG disclosures. This will likely drive demand for defensible methodologies, governance, and audit-ready data.
Strategic Takeaway
Scope 3 reporting is proving to be the most complex element for many Australian businesses. Unlike Scope 1 and 2 emissions, which relate to a company’s own operations and energy use, Scope 3 covers emissions across the full value chain. This includes supplier activities, product use, transport, and waste—data that is often incomplete or inconsistent.
Australian regulators have not yet provided detailed methodologies, but entities will be expected to apply reasonable estimation techniques aligned with globally accepted standards like the GHG Protocol. For firms operating in sectors like retail, manufacturing, and logistics, the lack of supplier readiness is a critical barrier.
Here is where proactive businesses are gaining an edge:
Conducting materiality assessments to prioritise which Scope 3 categories are most relevant
Beginning supplier engagement programs to collect reliable upstream emissions data
Implementing technology platforms to centralise ESG data collection and assurance
The complexity of Scope 3 also creates competitive risk. Companies that fail to address it early may be exposed to reputational damage, capital access limitations, or disqualification from procurement processes.
State vs. Federal Momentum
While the federal government is leading on mandatory climate disclosures, state-level policy is accelerating ESG relevance for sectors like construction, energy, and transport. For example, New South Wales and Victoria have embedded climate risk into infrastructure planning guidelines, requiring private contractors to show alignment with net zero pathways and climate resilience standards.
Additionally, superannuation funds and institutional investors—many of them regulated at the federal level—are pushing harder for ESG performance. The Australian Council of Superannuation Investors (ACSI) has made clear that companies with inadequate climate governance will face voting pressure or divestment. This means ESG reporting is no longer just about satisfying regulators—it is about maintaining license to operate with key stakeholders.
Why Now: The Rising Risk of Litigation and Investor Action
Increased regulatory clarity is not just creating a reporting obligation—it is sharpening legal risk. A recent uptick in climate-related litigation has demonstrated that both activists and shareholders are willing to challenge firms on inadequate disclosures or greenwashing. High-profile cases in 2024, including shareholder actions against ASX-listed energy firms, highlight how ESG transparency is becoming a matter of legal prudence.
Australian company directors are already bound by duties under the Corporations Act to act with care and diligence. In 2025, failure to properly assess and disclose climate risk could increasingly be seen as a breach of those duties. The legal risk is no longer hypothetical—it is active and growing.
Where Strategic Guidance Matters
While the frameworks are becoming clearer, execution remains complex. Data collection, stakeholder alignment, and reporting governance require cross-functional coordination and often external expertise. Businesses that treat ESG as a compliance checklist will fall behind. Those that see it as a lever for long-term value will find opportunities in an evolving landscape.
We work closely with executive teams, legal counsel, and sustainability leaders to navigate this complexity. From board training to disclosure strategy, we help our clients go beyond box-ticking. ESG, when done right, builds resilience, attracts capital, and shapes strategic advantage.
To explore how your organisation can turn ESG reporting into a competitive edge, reach out to our team for a confidential strategy session.
Frequently Asked Questions
What is mandatory ESG reporting in Australia in 2025?
Starting July 2025, large Australian companies must comply with mandatory climate-related financial disclosures aligned with IFRS S1 and S2 standards. This includes climate risk assessments, emissions disclosures, and scenario analysis.
Does ASIC regulate ESG disclosures?
Yes. ASIC enforces laws around misleading or deceptive conduct, including ESG statements. Inaccurate sustainability claims can trigger investigations or penalties under the Corporations Act.
Are Scope 3 emissions required to be reported?
Yes. The government has confirmed that Scope 3 emissions will be part of the new mandatory disclosure regime. Companies must start preparing estimation models and supplier data engagement strategies now.
What are ASX expectations around ESG reporting?
ASX-listed entities are expected to report ESG risks under the Corporate Governance Principles. Climate and sustainability disclosures are seen as critical to investor transparency and market integrity.
What’s the penalty for non-compliance with ESG reporting?
Regulatory non-compliance can result in legal penalties, reputational damage, and loss of investor confidence. Greenwashing claims in particular are drawing legal scrutiny in 2025.
