How ACNC charities can lead in impact transparency

Australia is entering a new era of corporate transparency with the introduction of mandatory sustainability reporting, a move that aligns with global trends in environmental, social, and governance (ESG) accountability. As of late 2024, the Australian Accounting Standards Board (AASB) approved the Australian inaugural sustainability reporting standards, which include mandatory climate-related disclosures under AASB S2 and voluntary broader sustainability disclosures under AASB S1.

ACNC charities: Current relief, but not off the hook

While these new standards apply to entities lodging financial reports with ASIC under Chapter 2M of the Corporations Act, charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are currently not required to perform mandatory sustainability reporting. This relief is due to their reporting pathway through the ACNC rather than ASIC.

However, current reporting relief does not mean irrelevance.

Why voluntary impact reporting still matters

Even though ACNC charities are not required to comply with the new mandatory sustainability standards, there is growing recognition that impact reporting, which goes beyond financial metrics to capture social and environmental outcomes, can significantly enhance stakeholder engagement. Here’s why:

• Donors and funders increasingly seek transparency around how their contributions are making a difference.
• Impact reporting builds trust and can differentiate your charity in a competitive funding environment.
• Boards and directors benefit from clearer insights into the effectiveness of programs and resource allocation.
• Public accountability is strengthened, aligning with broader societal expectations for ethical and responsible governance.

Possible reporting for ACNC charities?

While ACNC-registered charities are currently not required to perform mandatory sustainability reporting, there is a possibility that similar requirements may be introduced in the future. This potential shift may be influenced by developments in New Zealand, where Charities Services has implemented impact reporting with assurance through a Statement of Service Performance. Such changes could signal an evolving regulatory landscape in Australia, where impact assurance could eventually become an expectation, particularly for larger or more complex charitable entities.

How your charity can prepare

Even in the absence of a mandate, now is the time for ACNC charities to consider:

• Voluntarily adopting AASB S1 to report on sustainability-related financial information
• Developing internal frameworks for measuring and communicating impact
• Engaging with advisers and auditors to explore assurance options for impact statements
• Monitoring regulatory updates to stay ahead of potential changes.

Final thoughts

Mandatory sustainability reporting may not yet apply to ACNC charities, but the value of voluntary impact reporting is undeniable. It’s not just about compliance, it’s about leadership, transparency, and building a resilient future for your organisation and the communities you serve.

If your charity is ready to lead in impact transparency and explore voluntary sustainability reporting, our not-for-profit experts are here to help. Get in touch to start building a framework that strengthens trust, accountability, and future readiness.