ESG Regulations: Global Update November 2023

What do I need to know?

• The Australian Accounting Standards Board (AASB) released ED SR1, including three draft Australian Sustainability Reporting Standards (ASRS Standards):

1. 1. 1. 1. ASRS 1: General Requirements for Disclosure of Climate-related Financial Information, developed using International Financial Reporting Standards (IFRS) S1 as the baseline but with a scope limitation to climate-related financial disclosure, instead of sustainability;
         2. ASRS 2: Climate-related Financial Disclosures, developed using IFRS S2 Climate-related Disclosures as the baseline and incorporating Australia-specific content; and
         3. ASRS 101: References in Australian Sustainability Reporting Standards, developed as a service standard that would be updated periodically to list the relevant versions of any non-legislative documents published in Australia and foreign documents that are referenced in ASRS Standards.

• While these align largely with IFRS, some notable differences include:

1. 1. 1. 1. Not including disclosures against relevant industry-based metrics and SASB Standards, claiming these are “US-Centric” and not wholly applicable to the Australian market
         2. A more flexible approach to Scope 3 emissions reporting criteria
         3. Mandating reporting from not-for-profits that meet the requirements

What’s next?

• ED SR1 will close for comment after March 1, 2024.
• Companies would be required to report in a phased implementation scheme, with companies in the first phase (Group 1) reporting annually after July 1, 2024.

1. 1. 1. 1. Group 1 includes entities that are required to report under Chapter 2M of the Corporations Act and that fulfill two of the three thresholds:
            1. Has over 500 employees
            2. The value of consolidated gross assets at the end of the financial year of the company and any entities it controls is $1 billion or more
            3. The consolidated revenue for the financial year of the company and any entities it controls is $500 million or more.

AND Entities required to report under Chapter 2M of the Corporations Act that are a ‘controlling corporation’ under the NGER Act and meet the NGER publication threshold.