ASIC Urges Immediate Preparation for Compulsory Climate Reporting

The Australian Securities and Investments Commission (ASIC) has told companies based in Australia to ready themselves for the upcoming implementation of a compulsory climate disclosure framework.

During his keynote address at the Deakin Law School International Sustainability Reporting Forum, the Chairman of ASIC, Joe Longo, stressed the importance of upcoming climate reporting obligations.

He highlighted that organizations need to initiate the establishment of governance protocols, processes, and systems to comply with climate reporting obligations.

ASIC Seeks To Enhance Transparency In Financial Reporting

Those with Australian Financial Services (AFS) licenses will be compelled to submit reports under the new compulsory disclosure regime for the next several years. The implementation of this regime will follow a phased approach, starting on July 1, 2024.

Longo previously stated that the increasing focus on environmental, social, and governance (ESG) issues is catalyzing the most significant change to financial reporting. It also involves the change of disclosure standards in a generation.

He acknowledged the industry’s concerns regarding the possible difficulty of the latest reporting requirements.

He assured that ASIC would adopt a practical approach to enforcement and supervision, as is customary with any new regulatory framework. The regulators intend to increase guidance to help firms fulfill their new obligations.

ASIC Aims To Address Governance Challenges In Global Markets

Longo also emphasized that this represents a pivotal matter for global markets, and the team must be prepared to adapt to this transformation at each stage of its progression. To accomplish this, ASIC team must uphold elevated levels of disclosure and governance.

ASIC will also partner with government and other Council of Financial Regulators agencies. This alliance aims to aid in the implementation process, including efforts to help entities fulfill the new obligations, such as tackling data-related obstacles.

In its 4-year plan released in 2022, ASIC outlined some of the forthcoming climate initiatives. Recently, the regulatory body achieved a significant milestone by winning a landmark greenwashing case against Vanguard. Vanguard admitted to deceiving investors regarding ESG screens in its billion-dollar fund.

Longo stated that they will also gain from increased visibility of transitional and physical climate opportunities and risks throughout their value chains and the broader economy.

This will assist firms, including AFS licensees, in managing their climate-related opportunities and risks over the long, medium, and short term. ASIC has been very active in its regulatory duties. The watchdog now has more power to suspend license holders who do not meet its regulatory requirements.