ASIC chair issues guidance for Australian small and medium businesses
Small businesses play a vital role in Australia’s economy and their contribution to the country’s shift towards sustainability is equally important, according to the Australian Securities and Investments Commission (ASIC).
Considering this, Sarah Court (pictured), ASIC deputy chair, has issued guidance on recent developments, detailing essential information for small businesses.
According to Court, the Australian government is set to introduce compulsory laws on climate-related disclosures for major corporations and financial institutions. These regulations mandate that large entities annually report their climate-related financial risks, opportunities, strategies, and actions.
“The reporting requirements are intended to apply only to large businesses and financial institutions and will be phased in across three groups of businesses by size over time,” Court said. “The majority of Australian small and medium businesses will not fall within this category.
“However, many small businesses form part of the supply chain of larger businesses, which means they may need to engage with climate reporting considerations over time, even if they do not have any direct climate reporting obligations.”
The focus on scope 3 emissions, which include emissions from up and down a company’s supply chain, is a critical aspect of the proposed laws. Entities will need to report these emissions from the second year of reporting, allowing time for the development of necessary reporting capabilities.
The new regulations aim to make reporting scope 3 emissions feasible without incurring undue costs or effort, with initial reports likely based on estimations of available information.
ASIC plans to collaborate with small business representatives to create practical guidance on navigating the new regulations and understanding their potential impact.
In addition, Court emphasised ASIC’s commitment to combatting greenwashing — misleading claims about the environmental benefits of products or services.
Recent actions have been taken against companies and funds making unfounded “green” claims or misrepresenting sustainability aspects in their operations. ASIC’s efforts, supported by resources like the greenwashing report and an information sheet, aim to enhance trust and confidence in sustainability claims within the financial system.
“We encourage small businesses to consider this guidance if they intend to make sustainability-related claims in connection with the promotion or offering of financial products or services,” Court said.
ASIC’s initiative aligns with broader regulatory efforts, including those by the Australian Competition and Consumer Commission (ACCC), to ensure transparency and reliability in environmental claims.
“The ACCC has produced some excellent reference materials relating to the Australian Consumer Law, including a guide for businesses on making environmental claims,” Court said.
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