Australia

YEAR IN REVIEW

(1 July 2024 to 30 June 2025)

The commencement of the new mandatory climate-related financial disclosure regime in Australia, on a phased-in basis from 1 January 2025.
The publication of Australia’s first Sustainable Finance Taxonomy.
The release of the Australian Government’s response to the statutory review of the Modern Slavery Act, with in-principle agreement to most recommendations.
The Federal Court of Australia’s imposition of penalties exceeding a total of AUD40 million in four greenwashing cases brought by ASIC and the ACCC.
ASIC and the ACCC reaffirming greenwashing as an ongoing enforcement priority for 2025.

Scroll down or click below for further information on each key theme.

PODCAST OVERVIEW

Please click on the podcast above for a snapshot of the three key themes of ESG reporting, transition planning and greenwashing risks in respect of Australia.

KEY CONTACT

Ilona Millar
Partner, Gilbert + Tobin

A. ESG Reporting

1. Are there legal or regulatory requirements for companies to make ESG disclosures in your jurisdiction?

Yes.

2. What are the key legislative and regulatory sources for ESG disclosure requirements and to whom do they apply?

ESG disclosure requirements are primarily aimed at large companies and listed companies:

The National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act) requires companies that meet certain thresholds relating to GHG emissions and production and consumption of energy to provide yearly reports relating to the GHG emissions from particular sources, energy production and energy consumption.
The Corporations Act 2001 (Cth) requires most entities that prepare Chapter 2M financial reports under the Corporations Act^[1]or are reporting entities under the NGER Act^[2] to submit annual sustainability reports (on a phased-in basis from 1 January 2025 until 1 July 2027)^[3], including a climate statement containing the disclosures required by the Australian Assurance Standard Board S2 Climate-related Disclosures (AASB S2), relating to the entity’s climate-related governance, risk management, strategy, metrics and targets (climate-related financial disclosure).
The Modern Slavery Act 2018 (Cth) (Modern Slavery Act) requires entities based, or operating, in Australia, which have an annual consolidated revenue of more than AU$100 million, to report annually on the: (i) risks of modern slavery in their operations and supply chains and (ii) actions to address those risks.
For listed companies on the Australian Securities Exchange (ASX), the ASX Listing Rules require all listed entities to publish annually a corporate governance statement disclosing the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. Recommendation 7.4 of the ASX Corporate Governance Council’s Principles and Recommendations states that “a listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks”. The ASX Corporate Governance Council is currently consulting on a fifth edition of its Corporate Governance Principles and Recommendations, which refers to the impact of climate change-related risk and advises entities to consider ongoing developments in sustainability standard setting when making disclosures under Recommendation 7.4.

In addition, Australian regulators have released guidance that incorporates ESG-related disclosures:

Australian Securities and Investments Commission (ASIC) has published the Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors, Regulatory Guide 247: Effective disclosure in an operating and financial review and Regulatory Guide 280: Sustainability Reporting. This ASIC guidance incorporates physical and transitional climate-related risks, as identified by the TCFD and AASB S2, into the list of examples of common risks that may need to be disclosed in a prospectus and other reporting materials, and highlighted climate change as a systemic risk that could impact an entity’s financial prospects for future years and that may need to be disclosed in an operating and financial review. The guidance also addresses how entities should disclose on climate-related financial information in annual sustainability reports and other materials.
Australian Prudential Regulation Authority (APRA) has released the Prudential Practice Guide: CPG 229 Climate Change Financial Risks, which outlines prudent practices in relation to climate change financial risk management. Specifically, the guide provides guidance, sets out examples of better practice and aims to assist institutions in managing climate-related risks and opportunities.

[1] Chapter 2M captures large entities that meet at least two of the following three thresholds at the end of the financial year: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more and 100 employees or more.

[2] NGER reporting entities are corporations registered under the NGER Act that meet the following thresholds for the financial year: 50 kt of greenhouse gas emissions, 200 TJ of energy produced, or 200 TJ of energy consumed.

[3] The first group of reporting entities with obligations commencing from 1 January 2025 are those that meet two of the following three thresholds for the financial year: consolidated revenue of $500 million or more, consolidated gross assets of $1 billion or more and 500 employees or more. Assets owners with $5 billion or more of assets under management will also be captured within the second group of reporting entities.

3. Are the requirements mandatory or do they apply on a comply-or-explain basis?

The NGER Act contains mandatory disclosures in relation to GHG emissions and energy consumption.

The Corporations Act requires mandatory climate-related financial disclosures by in-scope Chapter 2M or NGER reporting entities.

The disclosures required by the Modern Slavery Act are also mandatory.

If a listed entity does not follow a particular recommendation of the ASX Corporate Governance Council, it is required to disclose that fact and provide the reasons why.

4. Which aspects of ESG do the requirements focus upon?

For listed companies, environmental, social and governance aspects are all covered.

For companies covered by the NGER Act, the focus is on climate.

For companies preparing sustainability reports under the Corporations Act, the focus is on climate-related financial disclosures (at least at this stage). The Government has indicated that sustainability reporting will focus on climate first, but not last, with other sustainability criteria anticipated to be included in the future.

For companies covered by the Modern Slavery Act, the focus is on social and supply chain risks.

The regulatory guidance that has been released primarily focuses on the environment, and in particular climate change and climate-related financial disclosures.

5. Are the disclosure requirements based on international standards? If so, which one(s)?

The reporting requirements under the NGER Act have been developed to be consistent with IPCC 2006 Inventory Guidelines.

The climate-related financial disclosure requirements under the Corporations Act require the preparation of a climate statement in accordance with the AASB S2, which has been developed in close alignment with the International Sustainability Standards Board’s IFRS S2 Climate-related Disclosures.

On 29 April 2025, the AASB released an exposure draft of proposed amendments to the AASB S2 for consultation, mirroring the proposed amendments under the ISSB to change the GHG emissions disclosure requirements under the IFRS S2.

The ASX Corporate Governance Council’s Principles and Recommendations encourage entities to disclose any material exposure to environmental risks by reference to the TCFD recommendations.

6. How do the disclosure requirements approach materiality (e.g. single or double materiality)?

The climate-related financial disclosure regime (as outlined in section A.2 above) adopts a single materiality approach in line with the ISSB Standards. If there is no impact on the company from climate-related issues, then the company is required to state that in their sustainability report.

A double materiality approach can be considered but is not currently required.

7. Are there requirements for the disclosure of GHG emissions? If so, please specify the scope (e.g. Scope 1, Scope 2 and/or Scope 3), to whom they apply and whether there are requirements on the measurement methodology.

Yes, the NGER Act requires companies that meet certain thresholds relating to GHG emissions and production and consumption of energy to provide yearly reports relating to Scope 1 and Scope 2 GHG emissions from particular sources, energy production and energy consumption. The National Greenhouse and Energy Reporting (Measurement) Determination 2008 provides the methods and criteria for calculating GHG emissions and energy data under the NGER Act.

The climate-related financial disclosure regime in Australia also requires in-scope entities to disclose any metrics and targets relating to climate that are required to be disclosed by the AASB S2, including Scopes 1, 2 and 3 GHG emissions (and financed emissions). The definitions of Scopes 1, 2 and 3 GHG emissions in the AASB S2 are aligned with the ISSB Standards. The AASB S2 also provides that Scope 3 GHG emissions disclosures are to include details of financed emissions, being the portion of GHG emissions of an investee or counterparty attributed to the loans and investments made by an entity to the investee or counterparty.

In relation to Scope 3 GHG emissions, the AASB S2 provide that entities will not be required to disclose exact data or detailed information that cannot be easily provided by their customers or supplies. Entities will also only be required to disclose Scope 3 emissions from their second reporting year onwards.

However, approximately half of the top 50 ASX listed entities have set targets and are already reporting on their Scope 3 GHG emissions with varying degrees of detail.

8. Are there requirements to obtain independent assurance of any ESG disclosures? If so, what is the scope of such requirements? If not, are there plans to introduce such requirements?

The Corporations Act requires that sustainability reports containing climate-related financial disclosures will be subject to mandatory assurance and audit requirements, in accordance with the Auditing and Assurance Standards Board (AUASB) auditing standards ASSA 5000 General Requirements for Sustainability Assurance Engagements and ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001. There will be a phased-in approach for the auditing of sustainability reports, with a progressive assurance phasing-in regime until 1 July 2030.

9. For companies not subject to mandatory or comply-or-explain ESG reporting, are voluntary ESG disclosures customary?

Many companies make ESG disclosures in their annual reports which are made against the TCFD recommendations, ISSB Standards or other international standards (such as the SASB standards or the GRI standards). Companies can also choose to report further information in sustainability reports under the Corporations Act, or any other materials, in accordance with the Australian Assurance Standard Board’s voluntary standards S1 General Requirements for Disclosure of Sustainability-related Financial Information (AASB S1).

10. Has your jurisdiction issued or adopted a taxonomy on sustainable activities? Is it mandatory and what is its scope of application?

In June 2025, the Australian Government and Australian Sustainable Finance Institute (ASFI) released the first version of the Australian Sustainable Finance Taxonomy (Taxonomy). The Taxonomy was developed following two rounds of public consultation and extensive industry and expert input.

The Taxonomy comprises technical screening criteria addressing climate change mitigation actions for six priority economic sectors: electricity generation and supply; minerals, mining and metals; construction and the built environment; manufacturing and industry; transport; and agriculture and land. In addition, the Taxonomy sets out criteria requiring that activities do not cause significant harm to other environmental objectives, such as adaptation and pollution, and the entity meets robust minimum social safeguards at the corporate level.

The adoption and use of the Taxonomy is not compulsory. However, it is anticipated to become a market standard for sustainable finance. In addition, ASFI has recommended that reporting on taxonomy alignment should be mandatory where users are seeking to make claims regarding the sustainability objectives covered by the taxonomy.

The Taxonomy will also assist reporting entities with preparing climate-related financial disclosures for sustainability reports under the Corporations Act.

11. Are there plans to adopt or incorporate any (other) international ESG reporting framework (e.g. the ISSB Standards and/or the TNFD)? If so, please give details.

Yes, while there are no formal proposals for new Taskforce on Nature-related Financial Disclosure (TNFD)-aligned reporting standards yet, we expect to see an increasing focus on nature-related disclosures in Australia.

The Australian Department on Climate Change, Energy, the Environment and Water (DCCEEW) has expressly announced its support of the TNFD framework, including as a strategic funding partner. In 2023, DCCEEW published TNFD Pilots – Australian case study report and value chain deep-dive specific industry guidance for Australian businesses We expect dialogue on nature-related disclosures to continue in Australia.

12. Other upcoming developments / direction of travel

Climate vulnerability assessments (CVA) could also play an increasing role in Australia’s ESG reporting landscape, particularly for businesses in the financial sector. In 2021, APRA launched a CVA of Australia’s five largest banks to assess the nature and possible impact of climate-related financial risks on banks’ lending. The CVA focused on transition and physical climate risks arising in Australia which could directly impact Australian lending. APRA also announced that it will consider extending the CVA to include insurance and superannuation sectors in the future.

Separately, in December 2024, the Australian Government released its response to the report of the statutory review of the Modern Slavery Act, released in May 2023. In its response to the report, the Government agreed in full or in principle to 25 of the 30 recommendations put forward by the report of the statutory review.

Notably, the Australian Government agreed in principle to expand the mandatory reporting criteria, introduce penalties for non-compliance with reporting requirements, appoint an Australian Anti-Slavery Commissioner and to undertake further consultation on amendments to enhance the due diligence requirements.

Reporting entities are currently required to report on any human rights due diligence frameworks they have in place but are not mandated to conduct due diligence. The Government has agreed in principle to undertake further consultation on extending the requirements under the Modern Slavery Act to mandate due diligence systems.

While the Government has not committed to immediate amendments to the Modern Slavery Act, or provided a proposed timeline for consultations, its response and commitment to undertake consultation on most recommendations signals that amendments will almost certainly be progressed in the future.

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B. Transition Planning

1. Has your jurisdiction set decarbonisation targets and strategies?

Yes, Australia has a legislated target to reduce its GHG emissions to 43% below 2005 levels by 2030 as well as to reach net zero by 2050.

The Australian Government has also set a renewable energy target of 82% by 2030.

Australia’s next NDC under the Paris Agreement is due in 2025, which will include a 2035 emissions reduction target.

2. Are businesses subject to any mandatory carbon pricing or other “polluter pays” instruments (such as ETS, carbon taxes or EPR schemes)? If so, please give details. If not, are there plans to do so?

Carbon Trading Scheme

Yes, Australia’s Emissions Reduction Fund enables landholders, communities and businesses to voluntarily run projects that avoid, reduce or remove GHG emissions from the atmosphere. Such projects can generate tradeable Australian carbon credit units (ACCUs) which represent one tonne of carbon dioxide-equivalent emissions stored or avoided by a project.

The Safeguard Mechanism requires large facilities to keep their Scope 1 GHG emissions at or below their set baseline. In 2023, Australia reformed the Safeguard Mechanism, introducing declining baselines for facilities and new Safeguard Mechanism Credits (SMCs) to be issued to a facility whose GHG emissions are below its baseline. Each SMC is also equal to one tonne of carbon dioxide equivalent and may be traded to other large facilities to reduce their net emissions in order to meet their baseline.

Carbon Taxes

No, Australia does not currently have a carbon tax or carbon price. Whilst a carbon tax was introduced in Australia in 2012, it was the subject of divisive political debate and was ultimately removed by a subsequent government in 2013. Neither major party has proposed to re-introduce a carbon pricing scheme since then. In the absence of an economy-wide carbon price, and any indication that one may be forthcoming in Australia, a shadow carbon price has recently been proposed by the Australian Energy Market Commission (AEMC).

In March 2024, a report released by the AEMC on “How the National Energy Objectives Shape Our Decisions” announced that its future decisions will be based upon a shadow price on carbon, which will be set initially at AU$70 per tonne. A shadow price is not a cost to be paid by emitters, like a carbon price or tax. Rather, it is an estimate of how much each tonne of CO2 equivalent costs the world, collectively. This cost will be included in the AEMC’s calculation of benefits and costs of energy-related rule changes, for example, transmission network rules to make it easier for new wind and solar projects to connect to the electricity grid. The shadow price is expected to increase to AU$420 per tonne by 2050, in line with Australia’s target to achieve net zero emissions.

CBAM

In July 2023, the Australian Government formally commenced a review of carbon leakage as part of the Safeguard Mechanism reviews. In November 2024, a consultation paper was published finding that a CBAM, similar to the one implemented in the European Union in May 2023, could be applied to imports of selected Safeguard-covered commodities with high carbon leakage risks.

The Government has not formally responded to the Carbon Leakage Review paper, meaning that the recommendations do not reflect official government policy. However, it indicates that there may be appetite for a CBAM in Australia in the future.

Circular economy

In October 2024, DCCEEW commenced consultation on reforms to Australia’s packaging regulations, including through the potential introduction of a mandatory extended producer responsibility scheme. The details of any proposed reform have not yet been announced.

Between March and May 2025, the Australian Packaging Covenant Organisation, a not-for-profit organisation that works with governments and businesses to reduce the environmental impact of packaging through a reporting framework, also conducted national consultation on a proposed industry-led extended producer responsibility reporting approach, with findings and proposed next steps for a revised producer responsibility approach to be announced in the second half of 2025.

3. Are there mandatory requirements for companies to have in place and/or disclose climate-related transition plans? If so, please give details. If not, are there plans for such requirements?

It is not mandatory to have a transition plan. However, under the new climate-related financial disclosure regime, entities are required to include details about their strategy for managing climate-related risks and opportunities, including information about their transition plans (if any), within their sustainability report.

The Australian Treasury also announced in its Sustainable Finance Roadmap, published in June 2024, that it will develop and publish best practice guidance for the disclosure of corporate transition plans by the end of 2025.

The recently released Australian Taxonomy (see item A.10 above) is also expected to inform how businesses prepare and disclose transition plans moving forward.

4. Are there mandatory requirements to set, meet and/or disclose climate-related targets? If so, please give details. If not, are there plans for such requirements?

Companies are not required to set climate-related targets. However, under the new climate-related financial disclosure regime, in-scope entities that have set climate-related targets are required to disclose information about those targets and how they have been set and have been, or are being, met.

In addition, under the Safeguard Mechanism, covered facilities have an obligation to keep their Scope 1 GHG emissions at or below their set baseline (as mentioned in section B.2 above). The reforms to the Safeguard Mechanism have introduced “baseline decline rates” for standard and landfill facilities, which have been set at 4.9% per year for most covered facilities. This means that those facilities’ baseline emissions, being their maximum level of permitted Scope 1 GHG emissions, will decline by 4.9% each financial year through to 30 June 2030.

Carbon credits can be surrendered by entities to manage any excess emissions to stay within their baseline. There are currently no limits on facilities’ ability to surrender ACCUs or SMCs to meet their declining baselines.

Entities and individuals, both within and outside the scope of the Safeguard Mechanism, may also choose to voluntarily purchase and cancel ACCUs and other types of carbon offsets, to meet social responsibility and sustainability goals, or other targets.

5. Other upcoming developments / direction of travel

Although transition plans are not currently mandatory, we expect there to be an increasing focus on transition plans. As noted, the Australian Government has announced that it will prepare separate guidance on transition plans.

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C. Greenwashing Risks

1. Are there any recent examples of legal proceedings, regulatory actions or investigations against or into greenwashing in your jurisdiction?

Yes.

In March 2024, the Federal Court of Australia found that Vanguard Investments Australia Ltd made false or misleading representations and engaged in conduct that was liable to mislead the public in relation to an “ethically conscious” fund offering in breach of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). ASIC alleged, and the Court upheld, that Vanguard had made false or misleading representations that one of their funds was of an ethically conscious standard, with securities screened against specific ESG criteria before inclusion in the fund. The Court ordered Vanguard to pay a penalty in the amount of $12.9 million. This was ASIC’s first successful greenwashing civil penalty action and puts ASIC towards the top of the list of financial regulators globally taking enforcement action to combat greenwashing.

In June 2024, the Federal Court of Australia found that LGSS Pty Ltd, as the trustee of the superannuation fund known as Active Super, made false or misleading representations and engaged in conduct liable to mislead the public in relation to its ESG credentials. Specifically, ASIC alleged, and the Court found, that Active Super made false or misleading representations by claiming in its marketing materials that it would not invest in companies associated with gambling, tobacco, oil tar sands, coal mining or in Russian companies, where there was evidence to the contrary. The Court imposed a penalty of $10.5 million against Active Super.

In August 2024, the Federal Court of Australia found that Mercer Superannuation (Australia) Limited (Mercer) breached the ASIC Act by engaging in conduct that was liable to mislead the public and making false or misleading representations about sustainable and environmentally friendly superannuation investment options marketed to its members. ASIC alleged that Mercer had made several representations that its “Sustainable Plus” investment options would exclude companies relating to the production and sale of alcohol, gambling and fossil fuels, where there was evidence to the contrary. Mercer admitted to the contraventions and agreed to the Court imposing a penalty of $11.3 million.

In April 2024, the Australian Competition and Consumer Commission (ACCC) also initiated its first greenwashing proceedings in the Federal Court, against Clorox Australia Pty Ltd (Clorox) for allegedly making false or misleading representations that its GLAD branded kitchen tidy and garbage bags are made of 50% ocean plastic. Clorox admitted to the misrepresentations and the Court imposed a total penalty of $8.25 million for making false or misleading representations in breach of the Australian Consumer Law.

In 2021, the Australasian Centre for Corporate Responsibility (ACCR) commenced proceedings in the Federal Court of Australia against gas company, Santos Limited (Santos), alleging greenwashing in relation to Santos’ strategy for achieving “net zero” for Scopes 1 and 2 GHG emissions by 2040. A three-week hearing took place in December 2024, with the ACCR maintaining that Santos engaged in misleading or deceptive conduct relating to its clean energy and net zero claims. Santos maintained that it rejects the allegations. This was the first court proceeding globally to challenge a net zero target, with judgment likely to be delivered by mid-2025.

There have been various other complaints made to the ACCC to investigate green claims made by companies. For example, Victorian Forest Alliance has lodged a complaint with the ACCC against a Victorian government agency, VicForests, for greenwashing over its advertisements and claims with messages such as “Sustainability is at the heart of everything we do.” A net-zero focused not-for-profit advocacy group has also lodged a complaint to the ACCC against Qantas Airways Limited’s allegedly misleading sustainability statements and net zero claims.

2. Are there any laws or regulations specifically dealing with greenwashing?

In Australia, there are laws prohibiting the making of false and misleading statements which may include greenwashing:

The Corporations Act 2001 (Cth) prohibits making statements (or disseminating information) that are false or misleading, or engaging in dishonest, misleading or deceptive conduct in relation to a financial product or financial service.
The Australian Consumer Law prohibits engaging in misleading or deceptive conduct in trade or commerce and also prohibits a person from making false or misleading representations about goods or services.
The ASIC Act also prohibits engaging in misleading or deceptive conduct in trade or commerce in relation to financial services.
In addition, ASIC has also published guidance for responsible entities of managed funds, corporate directors of corporate collective investment vehicles, and trustees of registrable superannuation entities, outlining key factors to consider when promoting a financial product or investment strategy as environmentally friendly, sustainable or ethical.

The ACCC also released in December 2023 a guidance for businesses on making environmental claims, enshrining eight principles to help businesses ensure their environmental marketing and advertising claims are clear and accurate, and not misleading. In December 2024, the ACCC finalised further guidance on sustainability collaborations and Australian competition law to help businesses who wish to collaborate to improve sustainability outcomes.

3. What are the likely grounds on which such proceedings, actions or investigations can be instigated?

Likely grounds include:

misleading or deceptive conduct under the Corporations Act, the Australian Consumer Law or the ASIC Act; and
breaches of directors’ duties.

4. Other upcoming developments / direction of travel

Both the ACCC and ASIC have announced that greenwashing is one of their key enforcement priorities for 2025. The ACCC has also announced that it will investigate a number of businesses for greenwashing, following an “internet sweep” of 247 businesses across eight sectors that identified 57% of those businesses as making what the ACCC considered to be “concerning environmental claims”.

In light of this, we expect to see an increasing number of legal proceedings and regulatory actions or investigations against companies operating in Australia which allege greenwashing.

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