Australia’s new climate disclosure rules create compliance challenges and opportunities

Australia’s largest companies must now report detailed climate information as part of their annual reports. The new rules started in January 2025 and affect companies with more than 500 employees or AU$500 million in revenue. 

Companies that prepared early are finding the transition easier. They already have the systems and processes needed to collect and verify climate data. Their competitors are now rushing to build these capabilities under tight deadlines. 

Over the next two years mandatory climate disclosure will extend to smaller companies requiring nearly 20,000 Australian businesses to comply by 2027. 

The Australian Securities and Investments Commission (ASIC) will enforce these rules. The regulator has shown it takes environmental claims seriously, imposing AU$24.2 million in penalties for greenwashing violations in 2024 alone. 

What the new rules require 

The legislation requires large corporations and financial institutions to publish detailed climate-related information. All reports must include third-party verification to ensure accuracy. 

ASIC administers the new regime and received additional enforcement funding in the 2024-25 Federal Budget. This signals strong regulatory oversight of corporate climate claims. 

Companies must report on their climate risks, opportunities, and strategies. They must also disclose their greenhouse gas emissions and explain how climate change affects their business operations. 

ASIC’s tough enforcement approach 

The regulator’s approach to climate disclosure enforcement will likely mirror its aggressive pursuit of greenwashing violations. Recent cases show ASIC’s willingness to impose substantial financial penalties for unsubstantiated environmental claims. 

Three major enforcement actions demonstrate this approach: 

Vanguard Investments Australia paid AU$12.9 million in September 2024 for making misleading claims about the environmental characteristics of its investment funds. 

Mercer Superannuation paid AU$11.3 million in August 2024 for misleading statements about sustainable investment options and exclusions. 

Active Super was ordered to pay AU$10.5 million in March 2025 for false representations about the environmental and social characteristics of its investments. 

These cases reveal common violation patterns that companies must avoid. These include making absolute claims without verification systems, using vague terms like “carbon neutral” without supporting evidence, and failing to match promotional materials with actual practices. 

The Federal Court noted that investors expect marketing representations to match underlying processes. This standard now governs all climate-related disclosures. 

ASIC’s surveillance extends across digital platforms. The regulator examines disclosure statements, websites, media releases, and executive interviews for consistency. Commissioner Kate O’Rourke emphasized that “investors and consumers are entitled to accurate and reliable information.” 

Compliance Framework and Preparation Benefits 

ASIC’s Information Sheet 271 provides the compliance blueprint for the new regime. It requires companies to substantiate claims with robust evidence, ensure accuracy across communications, and implement adequate verification systems. 

Companies following this framework report improved stakeholder relationships and better market positioning as mandatory requirements begin. 

Organizations with established climate data collection, verification processes, and reporting teams can navigate mandatory disclosure more easily. Meanwhile, competitors face operational disruption and higher costs. 

Well-prepared companies can make more detailed climate-related statements backed by verified data. This creates several practical advantages: 

Lower compliance costs: Companies with existing systems avoid the expense of building new reporting capabilities under pressure. 

Reduced regulatory risk: Well-documented processes help companies avoid the compliance failures that attract ASIC attention. 

Operational efficiency: Established data collection and verification processes run more smoothly than hastily assembled systems. 

Better stakeholder communication: Companies with verified data can communicate more confidently about their climate initiatives. 

The differences between prepared and unprepared companies are becoming evident across sectors. Some companies report improved access to capital and enhanced institutional investor interest, though these benefits vary by industry and company size. 

Major procurement programs increasingly require detailed climate documentation. This creates potential advantages for companies with robust disclosure capabilities, though the extent of these benefits depends on specific market conditions. 

Communication Requirements and “Greenhushing” Warnings 

ASIC Chair Joe Longo has warned against “greenhushing” - avoiding climate communication entirely. He describes this as another form of misleading conduct when companies have genuine environmental initiatives but fail to disclose material climate information. 

The regulator expects appropriate disclosure of material climate information. This creates communication requirements for companies with legitimate environmental programs. 

ASIC’s enforcement approach emphasizes governance and systems, not just disclosure accuracy. The regulator examines whether companies have adequate internal processes supporting their climate-related claims. 

This governance focus benefits companies that invested in comprehensive climate reporting infrastructure. It also means companies need robust internal systems, not just external communications. 

 

Building Compliance Capabilities 

Companies positioning themselves for success treat mandatory climate disclosure as a core operational capability rather than just a compliance obligation. 

This approach involves several key elements: 

Comprehensive verification systems: Establishing processes to check and validate climate data before publication. 

Specialized disclosure teams: Training staff specifically in climate reporting requirements and ASIC’s expectations. 

Stakeholder communication strategies: Developing clear, consistent messaging that exceeds minimum regulatory requirements. 

Internal governance processes: Creating oversight systems that ensure climate claims are accurate and supportable. 

The opportunity extends beyond basic compliance. Companies with verified climate credentials may access markets that increasingly demand authenticated environmental performance. 

Supply chain requirements from major corporations now often specify detailed climate documentation. This creates potential value-added opportunities for companies with credible environmental performance records. 

What Companies Should Do Now 

Understanding ASIC’s enforcement approach helps explain why early preparation matters. Companies face a choice between proactive preparation and reactive scrambling. 

Immediate steps include: 

Assess current capabilities: Review existing climate data collection and reporting systems against the new requirements. 

Review ASIC guidance: Study Information Sheet 271 and other regulatory guidance to understand compliance expectations. 

Build internal systems: Establish governance processes and verification systems before they become urgent necessities. 

Train relevant staff: Ensure teams understand both the technical requirements and ASIC’s enforcement approach. 

Plan communication strategy: Develop consistent messaging across all platforms and materials. 

Looking Forward 

Australia’s mandatory climate disclosure regime represents a significant shift toward transparency and verification in corporate climate action. The rules create both compliance obligations and operational opportunities. 

Companies that prepared early are converting regulatory requirements into operational efficiencies. They face lower compliance costs and reduced regulatory risk compared to competitors who delayed preparation. 

The question for companies is not whether they will comply - compliance is mandatory. The question is whether they will manage the transition efficiently or face the higher costs and operational disruption that come with last-minute preparation. 

ASIC’s enforcement track record shows the regulator takes environmental claims seriously. Companies that invest in robust systems and accurate disclosure are better positioned to navigate this new regulatory environment successfully.