Mandatory climate-related disclosure requirements: what ASIC clarifications mean for real estate sector

In March ASIC has released important guidance to assist entities on their sustainability reporting obligations. For the real estate sector — where climate change poses considerable risk to assets, and where demand for sustainable buildings is rising — clear, transparent climate-related reporting is now a governance priority.

The real estate sector historically has been one of the leaders in sustainability reporting, however, the mandatory climate-related disclosures set a new bar for the industry.  We unpack the key requirements, liabilities and practicalities required for confident compliance.

Need to know:

• RG 280 provides important guidance to entities about complying with their sustainability reporting obligations.
• Directors may rely on the special knowledge of their own staff or external consultants, however they should exercise care and due diligence, particularly to the substance of the disclosures and need to do their own independent assessments.
• All reporting entities should be aware of when they need to prepare a sustainability report, especially if the business is subject to restructures or acquisition activity.
• Information shared beyond what is required by the disclosure standards and information that is cross referenced in the sustainability report should be carefully considered – they are not covered by the modified liability settings.
• It is now high time organisations (in particular, Group 1 and 2 entities) make sure they are on track to complete the key technical processes necessary for the compliance: climate related governance set-up or review, conducting a climate related risk and opportunity assessment, carbon accounting and embedding climate into enterprise risk management and business decision making so that they are ready for reporting on time.
• Preparing for accurate mandatory climate reporting can be a transformative opportunity for real estate companies, creating an imperative for better data and insights that can ultimately improve operational performance and strategic decision making.

Australia’s corporate sustainability reporting regime is entering a new chapter. With the release of ASIC Regulatory Guide 280 (RG 280),¹ the corporate regulator has outlined how it expects companies to comply with their evolving obligations under Australia’s climate-related financial disclosure framework and the pragmatic approach it will be taking as regulator.

As the demand for sustainable building stock grows, transparency and honesty on sustainability performance becomes crucial for the real estate sector. For directors, legal advisors, and sustainability professionals alike, the message is clear:  sustainability reporting is no longer a “nice to have”, it is a core governance issue, and directors must engage with it now.

The folllowing distils four practical implications from RG 280 for companies and boards:

1. The reaffirmation of directors’ duties.
2. The implications of ASIC’s modified liability settings.
3. The importance of understanding when your entity becomes in-scope for mandatory disclosure.
4. The need to have processes in place so that you are ready to report on time.

1. Directors’ duties and climate governance are converging

While ASIC does not create any new duties under RG280, it makes plain that existing duties under the Corporations Act 2001 (Cth) (Corporations Act), including the duty to act with care and diligence,² apply when preparing sustainability reporting.

ASIC explicitly references the expectation that directors oversee and ensure the integrity of disclosures made under the Australian Sustainability Reporting Standards (ASRS), particularly AASB S2 – Climate-related disclosures (AASB S2). This means that directors must understand the climate-related financial risks and opportunities that materially affect their business and ensure that appropriate systems, internal controls, and oversight mechanisms are in place.

Further, while directors may rely on the special knowledge of their own staff or external consultants, they should exercise this care and due diligence, including applying a critical lens, to the content of the sustainability report.

Importantly, ASIC’s guidance aligns with the trend seen in cases like McVeigh v REST which reiterated that directors may be exposed to liability if they fail to consider foreseeable climate risks.³

Boards should now be asking the following questions:

• Do we as a board have an adequate understanding of the requirements or do we need to be briefed by internal and external experts on AASB S2 disclosure requirements and liabilities?
• Are we confident in our organisational capability, systems, and data to support reliable disclosure?
• Are all the required processes planned and underway in our company to give us confidence in on-time and compliant reporting?

Recap: What is the sustainability report? Per the Corporations Act 2001, the sustainability report is the fourth report as part of the annual reporting suite and sits alongside the directors’ report, financial report and auditor’s report. The sustainability report comprises: A climate statement Notes to the climate statement Any statements and notes prescribed by the Regulations; and A directors’ declaration. More information can be found in our previous article: Mandatory corporate ESG financial reporting: is your business ready?

2. Modified liability settings: Safe harbour, not a free pass

RG 280 also outlines ASIC’s approach to the modified liability settings introduced to support the implementation of the ASRS regime. These provisions, designed to encourage high-quality disclosure during the transition period, mean that certain climate-related statements will attract civil penalty protection for the first three years of the regime.

However, ASIC is explicit that this protection does not apply to all disclosures, and it should not be misunderstood as blanket immunity. The safe harbour will not cover statements that are:

• Outside the sustainability report (e.g. in the directors’ report or operating and financial review or cross-referenced);
• Disclosures included in the sustainability report beyond the requirements of the Corporations Actg. AASB S1- General Requirements for Disclosure of Sustainability-related Financial Information (AASB S1) data points which can be reported on voluntarily;
• Misleading or deceptive per the definition in the Corporations Act; or
• Deliberately false or reckless.

In short, while the modified liability settings provide welcome breathing space, they should not be relied on as a shield for poor preparation or lax oversight. Companies should be using this window to build robust internal controls, audit trails, and assurance processes. Notably, ASIC expects directors to act now in lifting their company’s capability, particularly around scenario analysis, emissions data (including scope 3) and transition planning.

Boards should also consider:

• Which disclosures fall outside the safe harbour and are exposed to liability under the usual settings i.e. statements made outside the sustainability report or voluntary disclosures made within the sustainability report beyond the requirements of the Corporations Actg.: AASB S1 disclosures.
• Whether the entity’s disclosures could be perceived as misleading or unsubstantiated.
• If appropriate legal review and assurance processes have been applied to sustainability statements.

3. Scoping: you might be closer than you think

RG 280 offers reminders on which entities will be required to report, and when. Reporting under ASRS is mandatory for Group 1 entities as of 2025, including those meeting the consolidated revenue, gross assets, and employee thresholds. However, ASIC cautions that entities not currently in scope may become subject to reporting due to changes in corporate structure, acquisitions, or changes in size.

This is a critical point for:

• Private companies considering IPOs’;
• Groups undergoing restructuring or consolidation;
• Subsidiaries of in-scope entities that may need to provide information to parent companies for consolidated disclosures; or
• Entities on the cusp of meeting the NGER registration or publication thresholds.[4]

Directors should not adopt a “wait and see” approach. Instead, they should proactively assess the company’s likely trajectory over the next 12-24 months and prepare accordingly.

Companies should be reviewing:

• Whether they meet any of the scope thresholds or are likely to in the near future; and
• If they have adequate controls in place to monitor thresholds and identify changes in reporting obligations.

 

Recap: Who needs to report and when

More information can be found in our previous article: Mandatory corporate ESG financial reporting: is your business ready?

4. The practicalities: first things first

RG280 reiterates the importance of establishing sustainability reporting processes that enable meeting reporting deadlines under the Corporations Act.⁵ This includes ensuring sufficient time for external audits.

Depending on organisational maturity and complexity, setting up in a reliable manner for reporting can take between six to 24 months.

In practical terms, organisations need to work on four technical processes that will ultimately provide the reporting basis for the majority of the qualitative and quantitative reporting data points. These are:

a) Auditable governance over climate: Establishing clear accountability and responsibilities for climate-related matters. It is important to ensure board oversight and management responsibilities can be clearly evidenced. The current governance arrangements may need to be revised, or new ones set up.

b) Climate-related risks and opportunities assessment: Understanding and documenting the organisation’s physical and transition climate risk exposure, vulnerabilities, adaptive capacity, business resilience and climate related opportunities. To avoid misrepresentation risk, reliable assessments based on trustworthy data sources and high-quality climate scenarios and modelling outputs, covering a sufficient range of climate hazards at a suitable granularity for own operations and supply chains are essential.

Examples of risks and opportunities for real estate entities include:

1. 1. Physical risks like extreme weather events which can impact property value and insurability.
   2. Transition risks like changes in regulations, and consumer preferences related to energy efficiency can influence project designs, operations, and ultimately financial performance.

c) Carbon accounting: Measuring your Scope 1 and 2 emissions and preparing for Scope 3 measurement across your property portfolio. Transition relief in AASB S2 provides an exemption from disclosing scope 3 emissions for the first year. Depending on value chain complexity and the number of running projects, identifying material emissions and gathering data for Scope 3 reporting can take several months.

d) Integrating climate considerations into business decision-making: The term “integration” appears in the AASB S2 standard and is a key focus area of the disclosures. Demonstrable integration of climate into business decision making, operations and risk management requires documented policies, processes and procedures.

When preparing for disclosures, it is important to use a continuous improvement approach. As market maturity improves year on year, regulator and auditor expectations around quantification, documentation and what a “good-enough” disclosure looks like will evolve.

To complete these modules, companies should be assessing:

• Whether they have robust climate data management systems.
• If they need to upskill staff including their internal audit functions.
• Whether operational policies, procedures, calendars and controls need to change.
• Whether climate is being discussed with every lens in mind – projects, portfolio, fund operations and corporate.

Final thoughts: the real estate imperative

ASIC’s message through RG 280 is clear: boards and executives must now treat climate and sustainability reporting with the same level of rigour they apply to financial disclosures. This is not just about interpreting guidelines; it signals ASIC’s enforcement stance and firmly establishes the regulator’s view that climate-related risks, such as the physical risks of extreme weather on property values or the transition risks associated with energy efficiency standards, are material financial risks for the sector.

Directors who are not across this space risk personal liability for inadequate disclosures and reputational damage among sustainability-conscious tenants and investors.

The most pragmatic steps boards of real estate entities can take today is to approach this like a financial reporting transformation. This means starting early on technical processes and ensuring the right support systems are in place. Support systems can be game changers in how the organisation is able to use climate data beyond compliance. Decisions on tools and technologies used for data collection and reporting can simplify compliance and improve real estate sustainability and value. Energy monitoring systems that can offer operational oversight for better decisions, tracking climate-related metrics and building analytics can cut costs, enhance comfort, and increase asset value by identifying inefficiencies. Preparing for climate reporting can hence be a transformative opportunity.

For real estate entities not yet directly in scope for mandatory reporting, now is the opportune time to build capability in these areas. Not just because future regulations may extend to them, but because it is increasingly commercially expected by tenants demanding sustainable buildings, investors prioritising greener portfolios, and insurers assessing climate-related risks to property values.

A note for asset owners: One area where RG 280 falls short is in providing clarity for fund managers on how disclosures apply at the fund entity level. While ASIC has acknowledged that further guidance is needed, for now, many property funds remain uncertain whether sustainability disclosures are required at the fund or asset level. Until ASIC or Treasury resolves this, fund entities should engage legal and sustainability advisors early to assess obligations under the ASRS and anticipate investor and regulator expectations.

Next steps

Group 1 real estate Entities with a financial year ending in December 2025 will likely begin publishing their first reports in March or April 2026, with ASIC, shareholders, investor advocacy groups and other community stakeholders waiting to see the results of companies’ efforts to comply under the new regime.

If you require specialist technical support with your climate-related risks and opportunities assessment, carbon accounting, preparing internal governance, systems and processes, or embedding climate into risk management and decision making, Materra can help. Materra is a sustainability consultancy that helps organisations navigate the shifting sustainability landscape, from mandatory sustainability reporting and compliance to voluntary ambition and performance, no matter what stage they are at in their journey. For more information, please contact info@materraconsulting.com.

If you require mandatory sustainability reporting legal advice, Hamilton Locke can help. The Hamilton Locke team advises across environment and planning, directors’ duties, and other ESG-related obligations. For more information, please contact Amelia Prokuda.

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1ASIC. (2025). Regulatory Guide 280: Sustainability reporting

2Corporations Act 2001 (Cth).

³McVeigh v REST (Federal Court of Australia, NSD1333/2018, unreported).

⁴The Corporations Act references section 13(1)(a) of the NGER Act to define the publication threshold. Under this section, an entity surpasses the threshold if its operations emit 50,000 tonnes or more of CO2 equivalent in a reporting year. Entities exceeding this threshold fall into Group 1 for reporting.

⁵Sustainability reports must be lodged with ASIC within three months after the financial year ends for disclosing entities, RSEs, and registered schemes, and within four months for all other reporting entities.