Understanding ASIC's Key Compliance Gaps in Australia’s Sustainability Reporting Framework

Heather Bone
Jul 10
4 min read

Australia’s mandatory Australian Sustainability Reporting Standards (ASRS) framework started in 2025, marking a new era for corporate sustainability transparency. Group 1 entities published their first sustainability reports early in 2026, setting the stage for others to follow. The Australian Securities and Investments Commission (ASIC) has since reviewed these initial reports and shared early feedback highlighting several compliance gaps. These insights are crucial for companies preparing for the 30 June reporting season and beyond.

This blog explores ASIC’s key observations, explaining where many entities fell short and how future reporting can improve. Understanding these gaps will help organisations meet ASRS requirements more effectively and contribute to stronger sustainability practices across Australia.

!Eye-level view of a sustainability report document with charts and graphs on a wooden desk

What ASIC Observed in the First ASRS Reports

ASIC’s early feedback focused on the quality and completeness of disclosures under the new ASRS framework. The regulator found that while many entities made a good start, several common issues need attention:

Incomplete disclosures: Some reports lacked full coverage of required sustainability topics, such as climate risks, social impacts, and governance practices.
Inconsistent data: Entities often presented data without clear methodologies or explanations, making it hard to verify accuracy.
Weak risk assessments: Many reports did not adequately describe how sustainability risks affect business operations or financial performance.
Limited forward-looking information: Few entities provided clear targets or plans for improving sustainability outcomes.
Poor alignment with ASRS requirements: Some disclosures did not follow the specific structure or terminology outlined in the standards.

These gaps reduce the usefulness of sustainability reports for investors, regulators, and other stakeholders who rely on transparent, comparable information.

Why These Gaps Matter

Sustainability reporting is no longer optional. It plays a vital role in:

Helping investors assess long-term risks and opportunities
Guiding companies to manage environmental and social impacts responsibly
Supporting Australia’s broader climate and sustainability goals

When reports miss key information or lack clarity, it undermines trust and slows progress. ASIC’s feedback aims to encourage better reporting practices that build confidence and drive meaningful change.

How Entities Can Improve Their Sustainability Reporting

Based on ASIC’s observations, companies preparing future ASRS reports should focus on these areas:

1. Cover All Required Topics Thoroughly

Ensure reports address every mandatory sustainability topic under ASRS, including:

Climate-related risks and opportunities
Environmental impacts like emissions and resource use
Social factors such as workforce diversity and community engagement
Governance structures overseeing sustainability

Use the ASRS framework as a checklist to avoid missing critical disclosures.

2. Provide Clear, Verifiable Data

Present data with explanations of how it was collected and calculated. For example:

Describe measurement methods for greenhouse gas emissions
Explain assumptions behind scenario analyses
Include third-party assurance where possible

This transparency helps users trust the numbers and compare performance across companies.

3. Strengthen Risk and Impact Analysis

Go beyond listing risks by explaining their potential effects on business strategy and financial results. For instance:

Detail how climate change might disrupt supply chains
Discuss social risks like labour shortages or community opposition
Link governance practices to sustainability outcomes

This approach shows a deeper understanding of sustainability challenges.

4. Set Clear Targets and Action Plans

Future reports should include measurable goals and timelines for improvement. Examples include:

Reducing carbon emissions by a specific percentage by 2030
Increasing workforce diversity to a defined level
Implementing new governance policies within a set period

Clear targets demonstrate commitment and allow stakeholders to track progress.

5. Follow ASRS Structure and Language

Align disclosures with the exact format and terminology of the ASRS. This consistency improves readability and comparability. Use headings and sections as prescribed, and avoid vague or generic statements.

Practical Example: Improving Climate Risk Disclosure

One Group 1 entity’s first report mentioned climate risks but lacked detail on how these risks affect its operations. ASIC noted this as a compliance gap.

To improve, the company could:

Identify specific climate risks relevant to its industry and locations
Explain how these risks impact supply chains, assets, or markets
Describe mitigation strategies and adaptation plans
Quantify potential financial impacts where possible

This level of detail helps investors understand the company’s resilience and preparedness.

What This Means for Group 2 and Later Entities

ASIC’s feedback provides a valuable roadmap for entities yet to publish their first ASRS reports. By addressing these common gaps early, companies can:

Avoid regulatory scrutiny or follow-up questions
Build stronger relationships with investors and stakeholders
Contribute to a more transparent and accountable sustainability ecosystem in Australia

Preparing well-structured, comprehensive reports will become a competitive advantage as sustainability performance increasingly influences investment and business decisions.

Sustainability reporting under the ASRS framework is evolving. ASIC’s early observations highlight where companies need to improve to meet expectations and deliver meaningful disclosures. Entities that act on this feedback will not only comply with regulations but also strengthen their sustainability practices and stakeholder trust.

The next reporting season offers an opportunity to raise the bar. Organisations should review ASIC’s feedback carefully, assess their current reporting processes, and commit to clearer, more complete sustainability disclosures. This will help Australia move toward a more sustainable future with transparent, reliable corporate reporting at its core.