Aussie regulator warns firms to stop claiming their sustainability disclosures aren’t reliable  

ASIC reflects on first batch of mandatory sustainability reports while PwC evaluates voluntary reports in California

Australia’s financial regulator has told firms to ditch disclaimers stating their sustainability disclosures shouldn’t be fully trusted.

The Australian Securities and Investments Commission (ASIC) issued the warning as part of a set of wider reflections on how businesses are approaching new sustainability reporting obligations under the national Corporations Act.

ASIC evaluated current practices among the 259 companies – 34 listed entities, and 225 unlisted – to have already filed their sustainability reports. 

It raised six main concerns, including the use of “disclaimers that conflict with the statutory framework and objectives” of the regime. 

“We identified some disclaimers – either in, or proximate to, the sustainability report – that indicated users should not rely on the information contained in the sustainability report to make investment decisions, or that stated the entity took no responsibility for the accuracy or completeness of certain information,” explained ASIC.  

It noted that such clauses “may confuse or mislead” users of the information, and are prohibited. 

Elsewhere, ASIC observed instances in which users were expected to draw their own conclusions about why certain information was reported, because companies didn’t justify their decisions or explain their judgements. 

“For example, in relation to how the entity had applied the proportionality mechanisms in S2,” it said, referring to the rules for reporting on climate risk. 

“Clear disclosure of assumptions and sources of estimation uncertainty supports users to understand the basis for forward-looking information.”

ASIC also flagged concerns about companies publishing financially-material sustainability information in a way that wasn’t “clearly distinguishable from additional, voluntary climate-related financial information”.  

“While the inclusion of additional climate-related information that is not specifically required by AASB S2 may be necessary to ensure the fair presentation of the sustainability report, including additional climate-related information beyond this may pose the risk of obscuring material information,” it warned.  

ASIC published the findings in a bid to help other firms and advisors as they prepare sustainability reports for Australia’s financial year ending 30 June 2026. 

It will release its “final observations” in the second half of the year. 

Meanwhile, PwC has published the findings of its analysis of 94 voluntary climate reports filed with the California Air Resources Board (CARB).

It found that 63% constituted the company’s first attempt at a climate-risk report, and most of the documents acknowledge vulnerability to physical and transition risks.

Less than 60% of the companies PwC evaluated disclosed GHG reduction targets.

CARB will be responsible for enforcing California’s SB 261 climate disclosure requirements, which have been approved but can’t be implemented because of an ongoing legal challenge. 

In the meantime, some companies have filed reports on a voluntary basis. 

“While these submissions may not necessarily reflect how companies would have responded in the absence of the injunction, they may provide some insights into how organizations are approaching disclosures about climate-related risks, like the ones required by SB 261,” said PwC.