First-wave sustainability reporting in Australia: Practical lessons from ASIC and SW’s team of experts
15/06/2026
As Australia’s first mandatory sustainability reports reach the market, early experience shows that organisations that start early and focus on material climate-related risks and opportunities, governance, data, and documentation will be better placed to meet reporting and assurance expectations under Chapter 2M and AASB S2.
Introduction
Australia’s first mandatory sustainability reports have now been lodged, and the early lessons are already clear. ASIC has shared some of its own observations from reviewing this first wave of reports.
Our SW Sustainability experts have also drawn on our experience supporting first-wave reporters, and we are seeing that the biggest challenges are not purely technical. They often sit at the intersection of judgement, governance, data quality, and documentation.
For organisations preparing for upcoming reporting cycles, the first wave provides a useful preview of where effort is needed most. Regulators have also started to signal their areas of focus, including the need for clear, decision-useful disclosures, defensible judgements, and reporting that aligns with the statutory framework under Chapter 2M and AASB S2.
Below are some of the practical insights we are seeing from the first wave of sustainability reporting in Australia and what they may mean for businesses getting ready to report.
Materiality is where many of the hardest judgements begin
Climate-related risks and opportunities sit at the centre of the reporting process. The challenge is not just identifying them, but assessing and documenting them in a way that is both business-relevant and reporting-ready.
One of the clearest lessons from the first wave is that education and engagement matter. For many boards, management teams, and operational stakeholders, sustainability reporting is still new.
Structured workshops can be an effective way to identify risks and opportunities. They serve a dual purpose by building management’s understanding of sustainability reporting and capturing the input needed for the report, along with the supporting documentation that underpins key disclosures.
A key lesson is the need to link climate risk to business risk. Some organisations initially conclude that they do not face significant climate risk. In practice, climate-related matters often overlap with existing business risks such as water availability, energy costs, asset resilience, and supply chain disruption. These issues may already be managed operationally, but they still need to be assessed through a climate-reporting lens.
When identifying the risk, transition risks in the value chain are also easy to overlook, even though the assessment may need to extend beyond the reporting entity itself.
Once risks are identified, the next step is to apply a clear materiality framework to determine what should be reported. That framework should evolve over time as the organisation builds capability, refines its understanding, and responds to input from stakeholders, auditors, and the market.
Materiality is not just about identifying material risks. It also requires judgement about what information about those risks matters to users. Where an organisation has already been affected by events such as flooding or bushfire, users may reasonably expect disclosure of that experience and its future implications, even if the historical financial impact was not, on its own, quantitatively material. This is consistent with ASIC’s early observations on sustainability reporting.
Greenhouse gas reporting is as much a process challenge as it is a data challenge
For many first-time reporters, greenhouse gas reporting has highlighted that the issue is not simply whether data exists, but whether it is sufficiently complete, consistent, and reliable for reporting and assurance purposes. Questions often arise around what to do when data is incomplete, how to use estimates appropriately, and how to document the basis for key assumptions.
A recurring practical issue is the need to reconcile emissions data back to underlying operational and financial records. For example, electricity data may need to be checked against site lists, invoices, or lease registers to support completeness. This is often where reporting teams discover that existing systems were not designed with external reporting in mind.
It is also important to recognise that some inputs are not static. Emission factors, global warming potential assumptions, and data sources can change over time. This means organisations need a methodology that is not only technically sound, but also documented well enough to explain changes from one reporting period to the next. AASB S2 specifically requires disclosures about greenhouse gases and the methods, assumptions, and inputs used.
Most organisations begin with manual processes, especially in the first year. That is often a practical starting point, but it quickly becomes clear that stronger internal processes and review controls are needed. Internal sense-checking is critical. In early cycles, teams are still building the experience needed to identify anomalies or challenge unusual results, so draft outputs and iterative review become an important part of getting to a robust result.
For larger groups, the complexity increases quickly. Different subsidiaries, business units and jurisdictions may rely on different source systems, definitions, and data owners. Starting early and avoiding assumptions about data availability are both critical.
Governance disclosures require more detail than many expect
Governance has emerged as one of the key focus areas in first-year reporting. While some organisations expected this section to be relatively straightforward, in practice it often requires careful drafting because the disclosures are qualitative, specific, and closely tied to how climate-related matters are actually governed within the business.
This is an area where it pays to slow down and work through the disclosure requirements carefully. Organisations need to balance the detailed requirements in AASB S2 with the broader legal and governance context under the Corporations Act, including the responsibilities of directors and those charged with governance.
The most effective governance disclosures tend to explain climate-related oversight in the context of the existing business rather than describing climate as a separate overlay. Existing board, management, and risk committee structures may already address relevant business risks. The task is often to identify where climate-related responsibilities already sit, where gaps remain, and how those roles and processes should be described clearly in the report.
Assurance readiness should start earlier than most teams think
The assurance process is still relatively new for many preparers, auditors, and boards. One practical lesson from the first wave is that organisations should allow more time than they initially expect for auditor review, challenge, and iteration. Multiple rounds of questions are common, and that needs to be built into the overall reporting timetable from the outset.
Good documentation makes a significant difference. A well-prepared internal paper trail can reduce friction during assurance by showing how conclusions were reached, what alternatives were considered, and where management judgement was applied.
In many cases, the published sustainability report is only the end product. It does not, by itself, show the underlying process, judgements, and evidence that sit behind the disclosures. That is why supporting documentation matters. This may include long lists of risks and opportunities considered, materiality assessments, rationale for inclusion or exclusion, records of scenario choices, and explanations of key assumptions. In practice, the draft report can be a useful checklist for identifying where further internal documentation is needed.
Key judgements and significant reporting decisions should also be summarised and presented to senior management and the board in a way that aligns with the organisation’s governance structure. This not only supports internal oversight, but also helps auditors understand the business context and the basis for management’s conclusions.
Key takeaway: First-year reporting does not need to be perfect, but it does need to be disciplined
One of the clearest messages from the first wave is that organisations should not let the pursuit of perfection delay progress. Sustainability reporting capability will evolve over time. What matters in the first year is establishing a proportionate, well-governed, and evidence-based process that can support the disclosures being made. In many cases, the act of drafting the report itself helps sharpen governance, data processes, and internal accountability.
ASIC’s observations
From ASIC’s media release on their initial observations from sustainability reporting, we note the following key points:
- 259 sustainability reports were lodged for the year ended 31 December 2025.
- ASIC observed a meaningful increase in both quantity and quality of climate-related financial information compared to prior voluntary disclosures.
However, some key deficiencies and areas for improvement were noted as follows:
Inappropriate disclaimers
Statements limiting reliance or responsibility (e.g. ‘not for investment decisions’) are not permitted and may mislead users.
Incomplete risk identification
Some entities failed to incorporate past events and known exposures when assessing future climate risks.
Weak disclosure of judgements/assumptions
Lack of clarity around key estimates and uncertainties reduces decision-usefulness.
Information overload risk
Excess voluntary disclosures can obscure material AASB S2 information.
Cross-referencing issues
Non-compliant references (e.g. to websites or unclear sections) were observed.
Climate-related targets
Inconsistent interpretation, entities must include targets required by law/regulation (e.g. Safeguard Mechanism).
ASIC expectations for 30 June 2026 reporters include:
- use ‘reasonable and supportable’ information, including forward-looking data
- ensure clear, proximate disclosure of key judgements and uncertainties
- maintain discipline on materiality and clarity, avoiding clutter
- ensure strict compliance with AASB S2 and RG 280, particularly for cross-referencing.
How SW can help
Whether you are just starting your sustainability reporting journey or preparing for assurance, we can support your team with:
- materiality assessments, including the identification and evaluation of climate-related risks and opportunities
- facilitated workshops that engage management and gather information, serving the dual purpose of capability building and supporting the reporting process
- greenhouse gas reporting and the drafting of sustainability reports
- preparing for assurance readiness
- targeted training for boards and management
- preparation of the internal documentation needed to support judgements and disclosures.
