Australia

Yes.

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

1. 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.
2. The Corporations Act 2001 (Cth) (Corporations Act) 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 Accounting Standards Board (AASB) S2 Climate-related Disclosures (AASB S2), relating to the entity’s climate-related governance, risk management, strategy, metrics and targets (climate-related financial disclosures).
3. 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.
4. The Workplace Gender Equality Act 2012 (Cth) requires private sector and Commonwealth public sector employers with 100 or more employees to lodge gender equality data with the Workplace Gender Equality Agency (WGEA) each year between 1 April and 31 May. In March 2026, WGEA released private and Commonwealth public sector employer gender pay gaps together for the first time, and employers that directly employ 500 or more employees must now select and meet, or demonstrate improvement against, gender equality targets and maintain policies or strategies for each of the six gender equality indicators.
5. 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 environmental or social 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:
6. Australian Securities and Investments Commission (ASIC) has published: (i) the Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors (RG 228); (ii) the Regulatory Guide 247: Effective disclosure in an operating and financial review (RG 247); and (iii) the Regulatory Guide 280: Sustainability Reporting (RG 280). RG 228 and RG 247 incorporate 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 highlight 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. RG 280 addresses how entities should disclose climate-related financial information in annual sustainability reports and other materials.
7. 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 AU$50 million or more, consolidated gross assets of AU$25 million or more, and 100 employees or more.

[2] Reporting entities under the NGER Act are corporations registered under the NGER Act that meet the following thresholds for the financial year: 50 kt of GHG 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 AU$500 million or more, consolidated gross assets of AU$1 billion or more, and 500 employees or more. Asset owners with AU$5 billion or more of assets under management will also be captured within the second group of reporting entities.

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 entities that prepare Chapter 2M financial reports or are reporting entities under the NGER Act. Broadly speaking, these encompass public companies, large proprietary companies, and disclosing entities or those in GHG or energy-intensive sectors.

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.

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.

The reporting requirements under the NGER Act have been developed to be consistent with the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.

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 IFRS S2.

In December 2025, following the ISSB’s targeted amendments to IFRS S2, the AASB issued the AASB S2025-1 Amendments to Greenhouse Gas Emissions Disclosures, which amends AASB S2 to provide additional relief and clarifies existing relief from specific GHG disclosure requirements in line with the ISSB S2 December 2025 Amendments. The amendments apply to annual periods beginning on or after 1 January 2027, with earlier application permitted.

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.

The climate-related financial disclosure regime (see 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 its sustainability report.

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

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 provides that entities will not be required to disclose exact data or detailed information that cannot be easily provided by their customers or suppliers. 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.

The Corporations Act requires sustainability reports containing climate-related financial disclosures to be subject to mandatory audit and assurance requirements, in accordance with the Auditing and Assurance Standards Board’s 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. There will be a phased-in approach for the auditing of sustainability reports, with a progressive assurance phasing-in regime for in-scope entities until 1 July 2030, starting with limited assurance and progressing to reasonable assurance.

Many companies make ESG disclosures in their annual reports by reference to the TCFD Recommendations, the 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 in any other materials, in accordance with the AASB’s voluntary standard, the AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information.

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, and ASFI is piloting the Taxonomy with financial institutions and has released guidance for Taxonomy-aligned use-of-proceeds debt. 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.

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

The Australian Department of 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 guidance for Australian businesses in specific industries. We expect dialogue on nature-related disclosures to continue in Australia, particularly alongside the Nature Positive reforms and the development of national environmental data and reporting functions within Environment Information Australia.

Climate vulnerability assessments (CVAs) 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.

In 2025-26, regulatory and market attention has increasingly shifted from preparation for mandatory reporting to first-year implementation, board governance, data quality, materiality judgements and assurance readiness, following the first sustainability reports lodged by Group 1 entities.

The first wave of sustainability reports has already seen an overall increase in the quantity and quality of climate-related financial information in the market compared to previous voluntary disclosures.

In its published early observations, ASIC has noted this increase in overall information and identified opportunities where the quality of reporting can be further strengthened, including:

1. appropriate use of disclaimers;
2. clear, effective and proximate disclosures of relevant judgements, assumptions and areas of measurement uncertainty; and
3. ensuring additional information does not obscure material climate-related financial information.

Consistent with its 2025 enforcement priorities (see section C.4 below), ASIC has indicated that it will take a pragmatic and proportionate approach to reviewing first-year sustainability reports, focusing on the reasonableness of entities’ governance processes and judgements rather than the perfection of first-year disclosures.

Separately, in December 2024, the Australian Government released its response to the 2023 report of the statutory review of the Modern Slavery Act. 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 has appointed an Anti-Slavery Commissioner and agreed in principle to expand the mandatory reporting criteria, introduce penalties for non-compliance with reporting requirements, and to undertake further consultation on amendments to enhance the due diligence requirements.

The Government has also consulted on civil penalties for key reporting failures and, in July 2026, announced a proposed criminal “failure to prevent” modern slavery offence for companies with annual consolidated revenue over AU$100 million, subject to a reasonable steps defence. Further consultation is expected to inform the design of that offence, associated enforcement options and possible victim remedies.

While the Government has not yet committed to other amendments to the Modern Slavery Act, its response and the ongoing consultation on strengthening the Act indicate that reforms to reporting criteria, penalties and due diligence obligations remain a live policy development.

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 electricity target of 82% by 2030.

In September 2025, the Government announced a 2035 emissions reduction target of 62% to 70% below 2005 levels and submitted its updated NDC under the Paris Agreement reflecting that target.

The Government also released its Net Zero Plan and six sector emissions reduction plans in 2025, setting out the policy framework for a fair, orderly and efficient transition to net zero.

Carbon Trading Scheme

Yes, the mandatory Safeguard Mechanism requires designated 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 equal to one tCO2e and may be traded to other large facilities to reduce their net emissions in order to meet their baseline. The Australian Carbon Credit Unit (ACCU) Scheme enables landholders, communities and businesses to voluntarily run projects that avoid, reduce or remove GHG emissions from the atmosphere. Such projects can generate tradeable ACCUs which represent one tCO2e stored or avoided by a project.

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 2014. Neither major party has proposed to reintroduce 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

There is currently no CBAM in Australia. 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 for a limited number of sectors in Australia in the future.

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 announced in its Sustainable Finance Roadmap, published in June 2024, that it would develop and publish best practice guidance for the disclosure of corporate transition plans – this was originally targeted for the end of 2025. The Treasury released a consultation paper on climate-related transition planning guidance on 15 August 2025, with consultation closing on 24 September 2025.

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

Companies are not generally required to set climate-related targets. However, under the 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. ASIC has also reminded entities that “climate-related targets” under AASB S2 include targets that the entity is required to meet by law or regulation, such as GHG emission reductions under the Safeguard Mechanism.

In addition, under the Safeguard Mechanism, covered facilities have an obligation to keep their Scope 1 GHG emissions at or below their set baseline (see 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.

Australia does not yet have a single economy-wide mandatory circular-economy regime. Existing product stewardship arrangements under the Recycling and Waste Reduction Act 2020 (Cth) may be voluntary, mandatory or shared with industry, and the Australian Packaging Covenant continues to operate as a co-regulatory arrangement focused on sustainable packaging design, recycling rates and litter reduction.

Mandatory circular-economy requirements are under active development for packaging. DCCEEW is progressing reforms following consultation on options including a national extended producer responsibility scheme, mandatory packaging design obligations, minimum recycled content requirements, restrictions on chemicals of concern and mandatory recyclability labelling.

In March 2026, Commonwealth, state and territory Environment Ministers also commissioned a circular economy roadmap by mid-2026 and asked officials to develop options for nationally consistent product stewardship arrangements, with an initial focus on batteries and packaging. These reforms are expected to affect packaging producers, retailers, consumer goods businesses, battery brand owners and resource recovery participants.

Australia does not currently have an economy-wide corporate sustainability due diligence regime equivalent to the EU's CSDDD. The principal Commonwealth human rights supply chain obligation remains the Modern Slavery Act, which is a mandatory reporting and transparency regime rather than a general duty to prevent or remediate value-chain harms.

However, due diligence requirements remain under consideration. The Government response to the statutory review agreed in principle to consult on amendments to enhance due diligence requirements, and the Attorney-General’s Department consulted between 21 July 2025 and 1 September 2025 on strengthening the Modern Slavery Act.

The Australian Anti-Slavery Commissioner has also been established as an independent statutory office holder under the Modern Slavery Act, with functions including promoting compliance with the Act and working with government, business, civil society and the broader community to address modern slavery.

Coles, a large Australian retailer, has disclosed modern slavery-related incidents and grievances through its modern slavery reporting. In its 2025 Modern Slavery Statement, Coles reported that it investigated 17 grievances raised through its grievance mechanisms, including allegations of underpayment by a services supplier which were substantiated and remediated through repayments, and an open investigation into allegations in its direct fresh produce supply chain concerning undocumented workers engaged in forced labour and forced overtime.

The Australian Government’s Sustainable Finance Roadmap remains the central policy framework for sustainable finance reform. Key measures include mandatory climate-related financial disclosures, the Taxonomy, transition planning guidance, sustainable investment product labelling workstreams and continued development of Australia’s sovereign green bond programme.

The Government has also implemented direct transition and industrial policy support through Future Made in Australia, including a hydrogen production tax incentive of AU$2 per kilogram of eligible hydrogen and a critical minerals production tax incentive, together with grants and programmes for renewable hydrogen, green metals, low-carbon liquid fuels, solar manufacturing and battery manufacturing.

For electricity infrastructure, the Capacity Investment Scheme provides a Commonwealth revenue underwriting mechanism intended to accelerate investment in renewable generation and clean dispatchable capacity, with the target increased in July 2025 to 40 GW of new capacity by 2030.

Although transition plans are not currently mandatory, we expect continued movement towards more detailed transition planning, finance and governance expectations through the Treasury’s transition planning guidance workstream, the Taxonomy, ASIC’s scrutiny of first-year sustainability reports and market practice following ACCR v Santos. The direction of travel is also towards stronger supply chain transparency and potential due diligence obligations under the Modern Slavery Act, increased nature and biodiversity regulation through the Environment Protection Reform Act 2025 (Cth) (EPR Act), and more nationally consistent circular economy and product stewardship requirements.

The EPR Act is expected to have a significant impact on businesses that require approvals for projects with potential impacts on matters of national environmental significance. Key features include:

1. the establishment of a new national environmental protection regulator on 1 July 2026 responsible for administering approvals and compliance and enforcement functions under the Environment Protection and Biodiversity Conservation Act 1999 (Cth);
2. the introduction of legally binding National Environmental Standards to guide and constrain decision-making;
3. streamlined assessment and approval pathways (including accreditation arrangements with the States and Territories); and
4. enhanced monitoring, compliance and enforcement powers, including increased penalties for non-compliance.

For businesses in the resources, infrastructure, agriculture and property sectors in particular, this is likely to mean more standardised, but potentially more rigorous, environmental impact assessment processes and increased scrutiny of nature-related impacts, complementing the voluntary TNFD-aligned disclosure trend (see section A.11 above).

The precise scope, commencement timing and transitional arrangements will depend on subsequent subordinate legislation and machinery-of-government arrangements, which businesses should monitor closely.

Yes.  

ASIC’s crackdown on financial services

In March 2024, the Federal Court of Australia found that Vanguard Investments Australia Ltd (Vanguard) 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 its 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 AU$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 AU$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 by 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 AU$11.3 million.

Sustainability claims challenged under consumer protection laws

The broader sustainability claims trend is not limited to financial products.

In April 2024, the Australian Competition and Consumer Commission (ACCC) initiated its first greenwashing proceedings in the Federal Court of Australia, 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 AU$8.25 million for making false or misleading representations in breach of the Australian Consumer Law.

In June 2025, the ACCC commenced Federal Court proceedings against Australian Gas Networks Limited, alleging false or misleading representations in its “Love Gas” campaign that the gas distributed to households on its network would be renewable within a generation. In July 2025, the ACCC also commenced proceedings against Edgewell Personal Care Australia Pty Ltd and its US parent concerning “reef friendly” sunscreen claims.

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. On 17 February 2026, the Federal Court handed down judgment, dismissing each of ACCR’s claims concerning allegedly misleading or deceptive statements in Santos’ 2020 Investor Day Presentation, 2020 Annual Report and 2021 Climate Change Report. The judgment is subject to appeal by ACCR.

The ACCC’s recent matters also cover consumer-facing energy, consumer goods and environmental donation or conservation-related claims, including proceedings concerning “Tree Day Tuesday” donation representations by Grill’d.

‘Blue’ washing (social responsibility) cases

Modern slavery and forced labour issues are also increasingly being framed through misleading conduct and sustainability-claims lenses. In August 2025, the Australian Uyghur Tangritagh Women’s Association commenced Federal Court action seeking documents from Kmart Australia (Kmart) to determine whether Kmart had adequately implemented its ethical sourcing procedures in relation to two suppliers with alleged links to the Xinjiang Uyghur Autonomous Region, and whether its public ethical sourcing statements were misleading or deceptive. Kmart has denied the allegations.

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

1. The Corporations Act 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.
2. 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.
3. The ASIC Act prohibits engaging in misleading or deceptive conduct in trade or commerce in relation to financial services.
4. 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. ASIC has also published RG 280, addressing sustainability-related financial disclosures outside sustainability reports as well as annual sustainability reports.

Likely grounds include:

1. misleading or deceptive conduct under the Corporations Act, the Australian Consumer Law or the ASIC Act;
2. breaches of mandatory sustainability reporting requirements, including incorrect, incomplete or misleading sustainability reports, and the exercise of ASIC’s directions power; and 
3. breaches of directors’ duties, including where directors fail to exercise care and diligence in relation to climate-related risks, opportunities, systems, controls and sustainability reporting disclosures.

The ACCC continues to prioritise consumer, fair trading and competition concerns in relation to environmental claims and sustainability, with a focus on greenwashing. ASIC identified greenwashing and misleading conduct involving ESG claims as a 2025 enforcement priority and, as mandatory sustainability reporting matures, has indicated that it will take a pragmatic and proportionate approach while reviewing first-year reports and using its directions power where necessary.

We expect sustainability-related proceedings and regulatory action to continue expanding beyond traditional product greenwashing to encompass climate reporting, transition planning, net zero and “clean energy” claims, nature-related claims, supply chain and social-impact representations, and directors’ governance of sustainability reporting. The ACCR v Santos judgment provides important guidance on the role of context, target audience, uncertainty and reasonable grounds in assessing forward-looking climate claims, but it does not remove the need for contemporaneous evidence, clear qualifications and board-level governance of sustainability disclosures.