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Enhanced sustainability reporting hitting APAC: Navigating the TCFD to ISSB uplift

(Sponsored article)

It’s official — a new bill is before Australia’s parliament that will make climate reporting mandatory for roughly 20,000 local entities starting on 1st January 2025.

Like many OECD countries, Australia has announced changes to its climate-reporting standards. Besides broadening mandatory reporting to the wider market, it will also introduce new International Sustainability Standards Boards (ISSB) Standards-aligned requirements, representing a significant uplift in requirements compared to existing frameworks.

Other countries in Asia-Pacific (APAC) are also acting on similar sustainability reporting measures. Singapore’s Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) are adopting ISSB and extending mandatory reporting requirements to all listed companies from 2025 and requiring selected non-listed firms to report from 2027 onwards.

The Securities and Exchange Commission (SEC) of the Philippines announced that it will revise the Sustainability Reporting Guidelines for publicly listed companies to align with ISSB standards. It will require listed companies to submit sustainability reports in two formats: the SR Narrative and Sustainability Report (SuRe) form.

Deep diving into Australia’s growing ESG reporting requirements

Several non-voluntary reporting frameworks already exist in Australia, including the National Greenhouse Energy Reporting (NGERS) scheme and the Safeguard Mechanism, which builds on the NGERS scheme. However, only a small number of organisations (less than 1,000) are obligated to comply with these schemes. Organisations listed on the Australian Securities Exchange (ASX) are required to disclose their sustainability efforts on a “comply or explain” basis. But, for most organisations in the country, sustainability reporting is currently voluntary.

Climate risk reporting is especially important in countries like Australia, due to its high vulnerability to worsening extreme weather and other adverse climate effects. So, despite the lack of legal obligation, many of Australia’s companies still choose to report on sustainability.

A survey of the largest 300 companies listed on the Australian Securities Exchange (ASX 300) found that entities of various sizes are now disclosing financial and sustainability information, whether by creating standalone sustainability reports, including it in annual reports, or both in their annual and standalone sustainability reports. However, many stakeholders don’t find this information helpful. The lack of a common standard for reporting has made it difficult for companies to deliver a transparent, credible and comprehensive picture of their ESG efforts.

Investors want greater transparency from companies’ around sustainability

A 2023 analysis of 247 Australian businesses found that 57% studied were guilty of “making false, misleading, unclear or unsubstantiated claims, pointing to ‘greenwashing’ — whether intentional or not —on a concerning scale.” As such, investors are seeking greater transparency of companies’ sustainability agendas to determine their long-term viability as businesses.

As such, the changes proposed in the new bill seek to fulfil these needs. But the call for better transparency and accountability brings an even higher level of responsibility.

Find out why reporting will be challenging, even for seasoned sustainability experts and how a compliance exercise can become your competitive advantage here.

Diligent is the leading GRC SaaS company, helping organisations connect governance, risk, compliance, audit and ESG in one consolidated view.

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