ASIC’s review identified several recurring issues, highlighting the challenges companies face as mandatory climate disclosures become more regulated.
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Some companies included disclaimers suggesting they were not fully responsible for the accuracy of sustainability information, or that readers should not rely on disclosures for decision-making. ASIC stated that mandatory disclosures are expected to be reliable and accountable.
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Certain entities had previously reported weather-related operational or financial impacts but failed to adequately reflect similar climate risks within their sustainability reports.
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Several reports included forward-looking estimates and climate-related figures without clearly explaining the assumptions, calculations, or methodologies used.
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In some cases, required climate-related information was mixed into large volumes of voluntary ESG content, making it difficult for readers to identify material disclosures.
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Some entities referenced external websites or reports in ways that did not align with disclosure requirements, raising concerns around transparency and accessibility of information.
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Certain companies did not properly address regulatory climate obligations; including targets linked to Australia’s Safeguard Mechanism; within their sustainability disclosures.
Taken together, the findings signal that sustainability reporting is now being treated as a formal compliance and governance requirement, not a standalone ESG communication exercise.
ASIC’s findings reflect a broader global shift. Regulators across major economies are no longer just checking whether companies report sustainability information; they are scrutinising whether disclosures are materially relevant, internally consistent, and supported by robust governance systems. In particular, regulators are increasingly focused on whether sustainability disclosures align with:
Financial reporting and risk assessments
Transition strategies and scenario analysis
Regulatory obligations
Previously disclosed climate-related impacts
This growing scrutiny extends to reporting integrity as a whole — not just the content of disclosures, but how they are governed, verified, and connected to the rest of a company’s reporting.
ASIC’s observations provide practical guidance for any organisation preparing climate-related disclosures under mandatory or emerging frameworks. Key priorities include:
𝗦𝘁𝗿𝗲𝗻𝗴𝘁𝗵𝗲𝗻𝗶𝗻𝗴 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝘀 𝗮𝗿𝗼𝘂𝗻𝗱 𝗘𝗦𝗚 𝗱𝗮𝘁𝗮; ensuring sustainability information is accurate, traceable, and evidence-backed.
𝗔𝗹𝗶𝗴𝗻𝗶𝗻𝗴 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲𝘀 𝘄𝗶𝘁𝗵 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴; climate risks should be consistent with financial statements and broader risk disclosures.
𝗖𝗹𝗲𝗮𝗿𝗹𝘆 𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝗶𝗻𝗴 𝗮𝘀𝘀𝘂𝗺𝗽𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗺𝗲𝘁𝗵𝗼𝗱𝗼𝗹𝗼𝗴𝗶𝗲𝘀; regulators expect transparency around how estimates, targets, and forward-looking disclosures are calculated.
𝗜𝗺𝗽𝗿𝗼𝘃𝗶𝗻𝗴 𝗯𝗼𝗮𝗿𝗱 𝗮𝗻𝗱 𝗹𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 𝗼𝘃𝗲𝗿𝘀𝗶𝗴𝗵𝘁; governance functions need a more active role in overseeing reporting processes and climate risk.
𝗥𝗲𝗳𝗹𝗲𝗰𝘁𝗶𝗻𝗴 𝗮𝗰𝘁𝘂𝗮𝗹 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗲𝘅𝗽𝗼𝘀𝘂𝗿𝗲; disclosures must capture physical climate risks, transition risks, and real-world business impacts.
𝗦𝗲𝗽𝗮𝗿𝗮𝘁𝗶𝗻𝗴 𝗺𝗮𝗻𝗱𝗮𝘁𝗼𝗿𝘆 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲𝘀 𝗳𝗿𝗼𝗺 𝗯𝗿𝗼𝗮𝗱𝗲𝗿 𝗘𝗦𝗚 𝗻𝗮𝗿𝗿𝗮𝘁𝗶𝘃𝗲𝘀; required disclosures should be clearly identifiable and not diluted within general sustainability communications.
The compliance gaps ASIC has identified; weak data controls, undisclosed methodologies, misaligned risk narratives, and poor separation of mandatory content are not unique to Australia. They reflect systemic challenges facing organizations navigating the shift from voluntary ESG communication to regulated disclosure. Cognitud works with organizations to build disclosure-ready reporting structures, including ESG database that improve data traceability, governance, and reporting consistency across mandatory climate disclosures. As regulatory expectations continue to evolve globally, we help businesses strengthen ESG data governance, improve reporting transparency, and build more reliable sustainability disclosure processes.
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Abhigyan Gupta
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Financial reporting standards are a set of accounting rules and guidelines that determine how companies prepare and present their financial statements. They help ensure consistency, transparency, and comparability of financial information across organizations and industries.
Financial reporting refers to the process of preparing and disclosing financial information through reports such as balance sheets, income statements, and cash flow statements. Financial statement analysis involves examining these reports to assess a company's financial performance, risks, profitability, and overall business health.
Greenwashing is the practice of making misleading, exaggerated, or unsubstantiated environmental claims to create the impression that a company, product, or service is more sustainable than it actually is. Regulators are increasingly scrutinizing greenwashing to improve transparency and accountability in sustainability reporting.
A double materiality assessment is a process used to identify sustainability issues that are financially significant to a business and those that have significant environmental or social impacts. It considers both how sustainability factors affect the company and how the company affects people and the environment.
ESG disclosure requirements vary by country and regulatory framework. In many jurisdictions, certain ESG and climate-related disclosures are becoming mandatory for specific companies, particularly large organizations and listed entities. Requirements continue to expand as regulators seek greater transparency on sustainability risks and impacts.
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