Will ASIC grant relief from mandatory sustainability reporting and assurance obligations?
Will ASIC grant relief from mandatory sustainability reporting and assurance obligations?
Financial reporting audit relief doesn’t automatically extend to the sustainability report. Entities seeking audit relief for their mandatory sustainability report must meet the criteria set out by the Australian Securities and Investments Commission (ASIC) in paragraphs 172-183 of Regulatory Guide 280 Sustainability reporting, and must do so in a timely manner.
ASIC’s sustainability reporting and audit relief decisions register contains some, but not all, of ASIC’s relief decisions regarding Chapter 2M mandatory sustainability reporting. To date, the relief decisions register contains 22 entries, giving us a flavour of the circumstances under which ASIC may or may not grant relief from sustainability reporting and related assurance requirements.
Nine out of 22 applicants granted relief
Of the 22 entries on the register at the time of writing, ASIC granted relief to only nine entities, primarily because it was satisfied that compliance with the relevant sustainability reporting and accompanying assurance requirements would impose unreasonable burdens on those entities.
The table below summarises the circumstances for which applicants sought relief, as well as ASIC’s key reasons for granting the relief, and the period for which the relief applies.
|
Decision date |
Circumstances of applicants |
Key reasons for granting relief |
Period of relief |
|
2 Sep 2026 |
Nine Commonwealth-owned subsidiaries are each required to prepare their own separate sustainability reports, even though they would be included in the Commonwealth Climate Disclosures (CCD) prepared by their Commonwealth parent entity for the same reporting period. |
Parent CCD reporting was materially comparable to AASB S2 Climate-related Disclosures, and separate reports added little value. |
Five financial years |
|
19 Aug 2026 |
The listed company was exempted for FY26 after a late capital raising during the reporting period unexpectedly triggered Group 1 reporting. |
Capital raising occurred very late in the reporting period, and the company had reasonably only prepared for Group 2 reporting in FY27. |
One financial year |
|
10 Aug 2026 |
The recently acquired company is exempted for an 18-month financial year due to synchronising the year-end with the acquirer’s. |
Mandatory year-end alignment caused the entity to enter Group 1 reporting earlier than if it had an ordinary 12-month year. |
One financial year |
|
9 Jul 2026 |
Joint-venture manager is a large proprietary company, but economic exposure and relevant emissions lie with the joint-venture participants. |
A standalone sustainability report by the joint venture entity offered limited benefit. |
Two financial years |
|
15 Apr 2026 |
Three companies completed acquisitions late in their reporting periods. |
The late transactions left insufficient time to establish reporting systems and governance. |
One financial year |
|
10 Apr 2026 |
An Australian non-operating holding company with a New Zealand subsidiary requested to lodge its Canadian parent’s consolidated sustainability report. |
Canadian parent entity reporting and assurance were equivalent to Australian requirements, and the material operations (in New Zealand) are captured in the global report. |
Two financial years |
|
13 Feb 2026 |
Forty-six subsidiaries were exempted on the basis that their dual-listed parent prepared a dual listed company (DLC) consolidated report (relief was also provided to allow the DLC parent to lodge a consolidated sustainability report). |
Consolidated AASB S2 reporting provided appropriate information and aligned financial and sustainability reporting boundaries. |
Three financial years |
|
4 Feb 2026 |
A Group 1 company with a 31 December year-end that is part of a stapled group was exempted from two years of standalone reporting because the stapled Group reports later as a Group 2 entity. |
It would otherwise incur setup and assurance costs for only two transitional periods before group reporting began. |
Two financial years |
|
19 Jun 2025 |
Three Group 1 subsidiaries of a registrable superannuation entity (which is a Group 2 entity) were exempted for their first reporting year. |
The three subsidiaries performed internal support functions, accounted for less than 1% of the group’s emissions, and would otherwise have been reported separately for only one year. In subsequent years, the subsidiaries would not be required to prepare separate sustainability reports because the parent prepares a consolidated sustainability report (section 292A(2)). |
One financial year |
Please refer to the register for more information about each application.
Twelve applicants refused relief
At the time of writing, ASIC refused to grant relief for 12 of the 22 entries on the register for varying reasons (summarised in the table below).
|
Decision date |
Circumstances of applicants |
Key reasons for refusing relief |
|
19 Aug 2026 |
Large proprietary company sought FY26 relief because its final threshold status was uncertain. That is, it meets the employee threshold and may meet the revenue threshold by 31 December 2026. |
It already met one Group 1 threshold, and forecasts indicated it might meet another. Uncertainty did not excuse the timely preparation of the sustainability report. |
|
3 Jul 2026 |
Incorporated mining joint venture sought ongoing relief because its majority owner would report its operations in its sustainability report. |
Owner-level reporting was not an adequate substitute for entity-level information and would weaken the connectivity with the applicant’s financial statements. |
|
23 June 2026 |
The company sought two years’ relief because a temporary contract caused it to meet Group 1 thresholds. The company would revert to a small proprietary company (and therefore not have to prepare a sustainability report) once the contract was complete. |
Temporary entry into Group 1, other regulatory reporting, and limited expected disclosures about climate risks and opportunities did not render compliance unreasonable. |
|
23 Jun 2026 |
The company sought FY26 relief after an acquisition early in the reporting period brought it into Group 1. |
Entry into the regime was foreseeable, and the acquisition occurred early enough to allow preparation. |
|
2 Apr 2026 |
Two financially distressed companies sought relief for FY25. |
They were not subject to external administration and/or ordinary compliance costs, and ownership uncertainty did not justify relief. |
|
17 March 2026 |
Australian subsidiary sought to use its French parent’s Corporate Sustainability Reporting Directive (CSRD) report for FY25. |
CSRD was not equivalent to AASB S2, and the proposal weakened the quality of connected information and comparability. |
|
10 Feb 2026 |
The holding company sought relief because it lacked operational control, and reporting would overlap with another group entity. |
Reporting applies to economically significant holding companies and must reflect each reporting entity’s own risks and financial position. |
|
28 Jan 2026 |
Parent and two subsidiaries sought permission to prepare standalone rather than consolidated reports. |
Relief was unnecessary because s292A(2)(b) already permitted the proposed parent-only approach. |
|
24 Nov 2025 |
Australian group (Group 1) lodges consolidated financial reports under Chapter 2M. The subsidiary is a Group 2 entity, and its first sustainability report is only due one year later (for FY26). The parent entity sought relief from preparing its parent-only standalone sustainability report for FY25 because it would be the only entity required to report in FY25, and the administrative burden of preparing such a report justified relief. |
The parent could avoid the burden by electing consolidated group reporting, and the burden resulted from its own reporting choice. |
|
21 Nov 2025 |
Three companies proposed reporting through an Australian partnership parent. |
The partnership was not a legal parent and did not prepare corresponding Chapter 2M financial reports. Therefore, the consolidated sustainability reporting option under section 292A(2) is not available. |
|
19 Nov 2025 |
Five foreign-owned companies sought to rely on foreign-parent TCFD reports. |
TCFD was not equivalent to AASB S2, connectivity was inadequate and Australian compliance costs were ordinary business costs. |
|
19 Nov 2025 |
Four companies proposed a combined report despite none controlling the others. |
The proposed boundary is not a consolidated group under AASB 10 Consolidated Financial Statements and conflicts with the connected-information requirements in AASB S2. |
Please refer to the register for more information about each application.
Mixed outcome
There was also one mixed outcome. In this instance, a large proprietary non-operating parent company (Group 1 entity) sought relief from preparing a consolidated sustainability report because its three subsidiaries operated three separate businesses, with each preparing its own sustainability reports.
ASIC refused to grant the parent relief from having to prepare a consolidated sustainability report. However, for the first three years of the mandatory reporting regime, it permitted the parent entity, in its own sustainability report, to cross-reference to the three operating subsidiaries’ sustainability reports, rather than prepare a consolidated sustainability report for the whole group.
Prior to seeking relief
ASIC encourages applicants to review the register before submitting a relief application, as it provides valuable insight into the factors it considers in its decision-making process. In other words, if you have a similar set of circumstances to one of the decisions above, it may not be worth your while making a relief application when there is a good chance that it will be rejected.
Timing of relief applications
ASIC is urging applicants to begin their sustainability reporting relief applications before the applicable statutory deadline. For example, the statutory deadline for a listed Group 1 entity with a 31 December 2026 year-end is 31 March 2027, and for an unlisted Group 1 entity it is 30 April 2027.
Applications lodged close to the statutory deadline may not allow sufficient time for ASIC to fully consider the application and, as a result, it could be refused.
ASIC’s powers to grant relief are prospective, so ASIC has no power to grant retrospective relief. If the listed Group 1 entity fails to obtain relief from its sustainability reporting obligations prior to the statutory deadline of 31 March 2027 (and the unlisted Group 1 entity by 30 April 2027), it will have breached its lodgement obligations under section 319, and relief received after this date will not remedy this past breach.
More information
Entities should refer to our previous article and Regulatory Guide 280 Sustainability reporting, for detailed information about ASIC’s process for granting relief from some or all the new sustainability reporting requirements.
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