No road map, but a pragmatic approach from ASIC to new climate rules

Chair Joe Longo has encouraged corporate Australia to invest in climate disclosure systems before the introduction of mandatory reporting requirements.

ASIC chair Joe Longo during the ASIC annual forum at the Sofitel in Melbourne. Picture: Aaron Francis/The Australian

The corporate regulator has assured Australian businesses it will take a “pragmatic approach” to the looming introduction of new climate reporting rules.

The boss of the Australian Securities & Investments Commission says it is still itself learning about the new rules, but has committed to working with business as the new reporting rules are introduced.

Speaking at an event at Deakin Law School on Monday, ASIC chair Joe Longo said the regulator would work with business as it moved to introduce its supervision and enforcement of the new climate reporting regime.

Mr Longo noted many companies “have questions about how ASIC will administer the new standards around the climate disclosure regime”, but sought to assure the room the regulator would work with business as they were introduced.

Under the new rules, companies would face a phased introduction of reporting obligations around climate and greenhouse gas emissions.

The mooted rules, which will now take effect in January 2025 after their delay, would require Australia’s largest companies to report on climate matters.

Companies with a turnover of $500m or more would be first to report, followed by smaller companies of $200m in turnover and finally $50m.

Asset managers with more than $5bn under management would also be required to report their climate disclosures.

Mr Longo said ASIC, which will enforce reporting, would publish a regulatory guide for companies “which will address ASIC’s approach to relief from those obligations, and interaction of the regime with existing legal and regulatory requirements”.

But Mr Longo warned that ASIC would not “give you a step by step road map”.

“That’s simply not possible,” he said.

“This is of course a matter for the parliament and for the AASB, but minimising divergent climate reporting requirements between different jurisdictions would likely improve market efficiency, the competitiveness of Australian companies, and reduce the regulatory burden for reporting entities,” he said.

Mr Longo backed the delays to the laws, which were initially intended to take effect from mid-2024.

The laws would also see companies given a grace period, with the laws not requiring mandatory assurance and auditing of claims until at least July 2030.

But Mr Longo said companies should look to make voluntary disclosures, noting it had been ASIC’s position since 2018.

“We also encourage entities to start developing the necessary organisational and governance structures to support future reporting requirements, including any additional sustainability-related topics that may be introduced in future years,” he said.

“Treasury is also aware that some are concerned about making forward-looking statements under the regime: they’ve responded by introducing the legislation alongside modified liability settings which will restrict private actions against certain protected statements for a

period of three years.”

Mr Longo said there would be a cost to companies complying with the new rules, but noted “those entities will also benefit”.

“New mandatory reporting requirements don’t necessarily make it harder to balance the scales between profit and legal requirements,” he said.

“We at ASIC think good practice in thinking about reforms like this is to look at both sides of the equation – both the benefits and the challenges.”

This comes as senate hearings into the new laws are set to kick off on Tuesday, with a coalition of groups representing more than 900 Australian companies backing the new standards.

Originally published as No road map, but a pragmatic approach from ASIC to new climate rules