ASIC provides guidance on keeping sustainability records

This article was originally published November 2023.

Mandatory climate reporting is around the corner for many Australian entities, and collating relevant report content seems to be the immediate focus for most businesses. However, given that the climate report will be subject to assurance over time, it is crucial that organisations maintain proper contemporaneous sustainability records because they serve as a basis for the climate report's content.

Why keep sustainability records?

Entities required to prepare a sustainability (climate) report must keep sustainability records (section 286A of the Corporations Act 2001).

Also, limited assurance is required in the first year over the governance disclosures, some strategy and risk disclosures (AASB S2 Climate-related Disclosures, paragraphs 9(a), 10(a) and 10(b)), and Scope 1 and Scope 2 emissions, so auditors must be able to substantiate these by reference to your sustainability records.

Must sustainability records be in writing?

Yes. Section 286A(1) requires entities to keep written sustainability records.

What are sustainability records?

Sustainability records must correctly explain and record how the entity prepared the information to support the content of its sustainability report (section 286A(1)).

Sustainability records must support the climate-related financial disclosures relating to governance, strategy, risk management, and metrics and targets—essentially all disclosures required by AASB S2—and they include any financial records necessary to support these disclosures.

Examples of sustainability records

Sustainability records may include, but are not limited to:

• Minutes of board or committee meetings
• Internal reports or analysis
• Reports commissioned by third parties, such as consultants or experts
• Greenhouse gas emissions inventories
• Source documentation and extracts from the general ledger evidencing climate-related impacts on the reporting entity’s financial position, performance and cash flows for the reporting period
• Working papers or documents evidencing inputs for, and assumptions used in, the sustainability report
• Any assessment undertaken by Group 3 entities for the purposes of making the statement that there are no material financial risks or opportunities relating to climate (section 296B(1)).

The above are merely examples of sustainability records. Businesses must consider the nature of the entity and their broader circumstances when deciding what sustainability records to keep that meet the requirement in section 286A(1).

Access to sustainability records

Sustainability records must be provided promptly if requested by the auditor, as they will inform the auditor’s assurance opinion on the sustainability report.

ASIC may also request that the entity provide sustainability records to support a statement in the sustainability report. ASIC can use its compulsory information-gathering powers to obtain sustainability records for regulatory and enforcement purposes. If sustainability records cannot be provided to ASIC on request, ASIC may conclude that the entity has not done the work required to support statements in their sustainability report, and that such statements are unsubstantiated.

Electronic storage of sustainability records

Entities are permitted to store sustainability reports electronically if they are capable of being reproduced at any time in written form, or a reproduction is kept in a written form approved by ASIC.

Electronic sustainability records must be converted into hard copy and made available within a reasonable time to a person who is entitled to inspect them.

Lastly, if sustainability records about certain matters are kept outside Australia, sufficient written information about those matters must be kept in Australia to enable the sustainability report to be prepared.

How long must an entity keep sustainability records?

Entities must retain their sustainability records for seven years after completing a particular year’s sustainability report (section 286(2)).

More information

Our previous article provides more information about ASIC's regulatory guidance for sustainability reporting, and our website contains additional resources for sustainability reporting and measuring your carbon footprint.

Need help?

With mandatory sustainability reporting imminent, entities must ensure they have appropriate sustainability records in place to support the production of their first sustainability report, and ongoing. Our sustainability reporting, sustainability strategy, and carbon accounting experts are always available to assist with your sustainability reporting journey. Contact us for help.