Australia's mandatory sustainability reporting regime is already improving the quality and consistency of corporate disclosures, according to a report from the Australian Securities & Investments Commission (ASIC), as policymakers consider whether aspects of the country’s climate reporting framework should be streamlined.

The regulator's assessment provides some of the first evidence of how the regime is functioning in practice. It arrives at a significant moment in the policy debate, with Australia's Treasury consulting on potential changes aimed at reducing compliance costs and easing implementation challenges. ASIC's findings suggest the framework is beginning to deliver on its core objective of improving the usefulness of climate-related financial information.

Climate-related disclosure quality improves

ASIC's conclusions are set out in Report 839, published on 21 September, following a review of 40 sustainability reports from the first cohort of entities required to comply with Australia's mandatory sustainability reporting requirements. The regulator found disclosures were generally more comprehensive and consistent than those made under the previous voluntary reporting environment.

"It appears that statutory reporting has not only resulted in heightened transparency, but also more meaningful engagement by entities with climate-related risks and opportunities," said Kate O'Rourke, ASIC Commissioner. She added that the review identified examples of organisations adapting governance and risk management processes in response to the new requirements.

Australia's mandatory sustainability reporting regime came into force in 2025 and is being phased in over three years. The first reporting group has now completed its initial reporting cycle, filing 312 sustainability reports with ASIC, from which the regulator selected 40 for detailed review. Group 1 companies had to meet two of the three following criteria: Consolidated Revenue of A$500 million (U$354.3 million) or more; gross assets of A$1 billion or more; or have 500 or more employees.

Areas for improvement

Despite the broadly positive findings, ASIC identified several areas where reporting quality could improve.

One key recommendation was stronger integration between sustainability and financial reporting. ASIC said companies should more clearly explain how climate-related risks and opportunities disclosed in sustainability reports relate to financial impacts reported elsewhere, enabling stakeholders, including investors, to better understand the financial implications of those risks.

The regulator also encouraged companies to consider past events, current conditions and future scenarios when identifying climate-related risks and opportunities, including impacts arising across the value chain. At the same time, ASIC warned against obscuring material information through excessive or unnecessary disclosure.

Looking ahead, ASIC said it will continue monitoring implementation of the regime. During the 2026-27 financial year, the regulator plans to review a further sample of sustainability reports from Group 1 entities and continue engagement with major audit firms on assurance approaches for sustainability disclosures.

Findings arrive as reform consultation continues

ASIC's review was published shortly after Australia's Treasury launched a consultation on possible changes to the climate-related financial disclosure framework, less than two years after mandatory reporting began. The consultation, which closes on 2 October, seeks feedback on a range of measures, including assurance requirements, reporting guidance and Scope 3 emissions data collection, with the stated aim of reducing compliance costs and improving implementation efficiency.

The timing places the findings directly into a growing discussion about whether the framework requires adjustment. Proponents of reform argue that elements of the regime could be simplified without undermining reporting objectives, while others caution against weakening requirements before companies and investors have had sufficient time to adapt. ASIC's review offers an early indication of how the regime is performing in practice.

Commenting on the proposed reforms, O'Rourke said ASIC supports measures that reduce regulatory burden while preserving the core elements of sustainability reporting. She added that the report's findings are intended to help reduce regulatory uncertainty and improve the quality of information available to users.

For policymakers considering potential changes, the review presents a clear message: while implementation challenges remain, early evidence suggests mandatory sustainability reporting is improving the quality and consistency of climate-related financial disclosures, even as debate continues over how the framework should evolve.

Key takeaways

For investors, ASIC's findings provide early evidence that mandatory climate reporting is improving the consistency and decision-usefulness of corporate disclosures. As policymakers consider potential reforms, the review suggests the debate is shifting from whether climate-related reporting adds value to how the framework can be refined without weakening the quality of information available to the market.

The findings also land as Australia's peak AGM season gets under way. Most large ASX-listed companies have 30 June year-ends, so their first mandatory sustainability reports, covering the 2025-26 financial year, are being published alongside annual reports ahead of meetings in October and November. With Treasury's consultation closing on 2 October, investors are being asked to weigh in on the framework's future just as they begin using its first outputs at scale. ASIC's emphasis on connecting sustainability and financial reporting gives investors a practical benchmark: where companies fail to explain how material climate risks flow through to their financial statements, investors may raise the issue in pre-AGM engagement or reflect it in votes on director re-elections and remuneration.