Australia’s Push Toward a Sustainable Future: What Small Businesses Should Know About ASIC’s New Reporting Requirements
- Joanna Lu
- Apr 11
- 3 min read
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As global attention to climate change and sustainable business practices continues to grow, the Australian government is steering enterprises toward higher standards of environmental and climate-related disclosure.
According to a recent announcement by the Australian Securities and Investments Commission (ASIC), starting from 1 January 2025, large companies and financial institutions will be formally subject to a mandatory sustainability reporting regime. These entities will be required to regularly disclose information to investors and the public on climate-related financial risks, strategic responses, and governance structures.
Although the regime initially applies to large entities, small businesses—being a vital part of the economic ecosystem—should begin preparing for potential indirect impacts and emerging opportunities.
Overview of the New Regulation: Who Is Affected?
Under the current regulatory framework, mandatory sustainability reporting will be introduced in phases, with the initial stage applying to large listed companies, registered financial institutions, and very large entities operating in Australia. The key disclosure areas include:
Climate-related risks
Strategic objectives for climate change mitigation and adaptation
Greenhouse gas emissions data
The board’s governance responsibilities in sustainability matters
These disclosures must be prepared in accordance with the standards issued by the International Sustainability Standards Board (ISSB) and incorporated into the company’s financial or annual reports.
Do Small Businesses Need to Report?
For most small businesses, there is currently no obligation to report under the new regime. Even registered companies (such as Pty Ltd) will typically not be subject to disclosure requirements before 2028.
From 1 July 2028, however, a company may fall within the scope of the regulation if it meets any two of the following thresholds:
Annual revenue of AUD 50 million or more
Total assets of AUD 25 million or more
100 or more employees
This means that most small and medium-sized enterprises (SMEs) will remain exempt for the next few years, providing a buffer period for preparation and transition.
Indirect Impact: The Crucial Role of Small Businesses
While the new reporting requirements are primarily targeted at large corporations, their scope often extends to climate risk management across the entire value chain. As such, large clients, suppliers, and financial institutions may seek environmental data from their business partners, including small and medium enterprises.
Small businesses, as integral components of larger supply chains, may therefore bear indirect responsibilities in supporting their partners' sustainability disclosures. Even without a direct reporting obligation, their operational data—such as energy usage, emissions, and sustainability practices—can be essential for ensuring their partners' compliance.
In this context, small businesses should anticipate potential information requests and consider how their business activities contribute to broader ESG reporting efforts.
How Small Businesses Can Prepare
To better adapt to the evolving regulatory environment, small businesses should consider the following actions:
Enhance Compliance Awareness: Stay informed about policy updates and build a foundational understanding of sustainability, carbon disclosures, and ESG responsibilities.
Establish Data Recording Mechanisms: Begin tracking environmental data—such as energy, water, and transportation usage—to prepare for potential partner requests.
Communicate and Collaborate Proactively: Engage with clients and suppliers to clarify data needs and formats, ensuring smoother cooperation.
Seek Professional Advice: Consult financial, legal, or ESG advisors to identify potential compliance risks and design suitable response strategies.
Turning Compliance into Opportunity
In a future business landscape driven by transparency and sustainability, companies with strong environmental data management and strategic direction will gain a competitive edge. They will be better positioned to partner with large clients, access financing, attract investors, and benefit from policy incentives.
The earlier a small business begins to understand the requirements, build partnerships, and adopt sustainable practices, the sooner it can reap the benefits of the green transition.