As nations around the world are increasingly invested in climate change action, sustainability, and governance responsibility, policies continue to expand and evolve. This includes policies related to corporate actions and transparency in an effort to work towards a more sustainable future.
Australia has a large part to play in this. In recent years, this increase in social, economic, and political pressure that has been levied on the Australian economy and industries has included increased scrutiny and disclosure requirements on companies operating in Australia. These companies are facing a rapidly evolving reporting and regulatory landscape, with variations across jurisdictions, in what has become colloquially known as a ‘word salad’ of policies.
Despite this, businesses operating in Australia are embracing responsible practices that focus on environmental, social and governance (ESG) issues. And as 2025 approaches, and the introduction of the Australian Sustainability Reporting Standards and the National Greenhouse and Energy Reporting Scheme have been enacted, a few key trends and predictions have cropped up.
Let’s dig in.
what Is corporate sustainability?
First things first: what is corporate sustainability?
It’s exactly what it sounds like: Corporate sustainability is the efforts that corporations make towards a sustainable future. This includes collection of ESG data, dissemination of data towards action, transparency, accountability, and due diligence.
Corporate sustainability is an effort to work towards a sustainable future, environmentally, socially, and in governance, with a specific focus on climate-related issues and risks.
Many environmental policies are focused on ESG and corporate sustainability, including the Australian Sustainability Reporting Standards and the National Greenhouse and Energy Reporting Standard.
We’ll go into these in more detail next.
what are the Australian sustainability reporting standards? (ASRS)
As the Australian economy continues to shift, and companies continue to become more globalized, it is not just important, but essential for Australian businesses to reflect these international standards. One of the most important reasons for this is to ensure business operations across borders and overseas remain robust.
The Australian Sustainability Reporting Standards (ASRS) is a set of regulatory standards issued by the Australian Accounting Standards Board (AASB) on September 20, 2024. It is a “climate first” approach to adopting the International Sustainability Standards Board’s sustainability disclosure standards (IFRS S1 and IFRS S2), which form a comprehensive global baseline of sustainability disclosures.
In that effort, the ASRS is designed to closely reflect the International Sustainability Standards Board’s (ISSB) International Financial Reporting Standards (IFRS), which brings Australian sustainability in alignment with international standards.
The ASRS are broken into two final standards:
- AASB S1: Is the General Requirements for Disclosure of Sustainability-related Financial Information, which is a voluntary Standard covering sustainability-related financial disclosures. It aligns within the scope of IFRS S1. Entities electing to voluntarily apply this Standard would disclose all sustainability-related risks and opportunities that could reasonably be expected to affect a business’s financials, either over the short, medium, or long term.
- AASB S2: Is the Climate-related Disclosures – a mandatory Standard incorporating necessary content presented in the IFRS S1, which allows it to function as a standalone, climate-only Standard. Entities required by the Corporations Act to apply AASB S2 should refer to the Treasury Laws Amendment Act, 2024, for details about the changes to the Corporations Act regarding preparation of their annual sustainability reporting.
While it may appear at first glance to be just another policy designed to create reporting work, the ASRS is an integral tool to corporate sustainability in Australia that is in line with international standards.
The ISSB was designed to create a baseline framework for sustainability reporting. With a focus on international consistency, the ISSB fosters transparency, accountability, actionable measures, and international corporate governance. It is also a tool with which investors and stakeholders – including the public – are able to view and assess corporate performance with respect to climate change related issues.
what are the disclosure requirements under the ASRS?
As the final ASRS framework is in alignment with the IFRS Sustainability Disclosure Standards, there are 4 categories of disclosure that Australian companies must comply with:
- Strategy
- Risk Management
- Governance
- Metrics and Targets
strategy
Sustainability-related disclosures on strategy provide transparency on an organization's strategy for managing sustainability-related risks and opportunities.
This includes:
- Relevant risks and opportunities
- Business impact
- Strategic influence
- Financial effects
- Strategic resilience
risk management
The disclosures on risk management help individuals understand a company’s process of identification, prioritization, access, and monitoring of sustainability-related risks and opportunities. Additionally, information on how a company integrates these processes into their overall risk management process is made available.
This includes information about:
- Inputs and scope
- Scenario analysis
- Risk assessment
- Risk prioritization
- Monitoring
- Process changes
- Identification, assessment, prioritization and monitoring of sustainability-related opportunities
governance
The sustainability-related financial disclosures on governance aim to provide transparency on a company’s governance process, including controls and procedures to monitor, manage, and oversee sustainability-related risks and identify opportunities. This should be broken down into the following:
- Roles and responsibilities
- Skills and competencies
- Strategic oversight
- Target setting and monitoring
Additionally, management’s role in the process includes:
- Delegation and oversight
- Controls and integration
metrics and targets
Disclosures on metrics and targets allow individuals access to an organization's performance on its sustainability-related risks and opportunities, including steps towards any sustainability-related goals. Disclosure of information includes:
- Required metrics
- Organization-specific metrics
- Measure and monitor risks or opportunities
- Track performance of set targets
For more information on the ASRS, head over here.
what is the national greenhouse and energy reporting scheme (NGER)?
The National Greenhouse and Energy Reporting Scheme (NGER) is a framework for reporting company information with respect to greenhouse gas emissions, energy production, and energy consumption.
Under the NGER, companies that meet certain thresholds must register under the framework, report annually on emissions, energy production and consumption.
who must report under the NGER?
Controlling corporations or companies that may have reporting obligations under the NGER must register as an NGER reporter. This is a constitutional corporation without an Australian incorporated holding company. This can be a non-operational holding company without day-to-day business operations, a foreign incorporated entity operating in Australia without an Australian incorporated subsidiary.
what are the NGER reporting thresholds?
There are 2 types of thresholds that determine which companies have obligations under the NGER: Facility thresholds and corporate group thresholds.
- Faculty thresholds: 25,000 tonnes or more of carbon dioxide equivalence (scope 1 and scope 2 emissions); production of 100 terajoules (TJ) or more of energy; or consumption of 100 TJ or more of energy.
- Corporate group thresholds: 50,000 tonnes or more of carbon dioxide equivalence; production of 200 TJ or more of energy; or consumption of 200 TJ or more of energy.
If a corporation only triggers facility level thresholds, that corporation is required to report on only the individual facilities that reach the facility thresholds.
Once a corporate threshold is reached, a company must report on all of the group’s facilities, regardless of individual facility threshold.
3 key trends and predictions for 2025
Amid global economic and geopolitical uncertainties, regulatory compliance has consistently been a driver of corporate sustainability management. Naturally, companies will want to know how they can combine sustainability with profitability while still remaining cautious.
Here are 3 key trends and predictions in corporate sustainability management for 2025.
operational efficiencies take the forefront
Previously, companies have focused on regulatory compliance as the main reason for reporting ESG metrics. However, as policies have become more important around the world, companies have stepped up to the challenge and started inculcating sustainability throughout their operational efficiencies.
Going forward into 2025, this will become even more essential. Companies are looking to not only create operational efficiencies, but overall sustainability as part of their fiscal responsibilities. Companies will continue to find cost savings through corporate sustainability measures, increasing transparency, accountability, and utilizing ESG data as not just a responsibility, but a tool to improve overall company performance, from the ground up.
companies will continue to be more circular economy-focused
Adjacent to the importance of operational efficiencies, the adoption of the circular economy as an arm of corporate sustainability has risen in popularity, justifiably.
A circular economy is an economic system where the materials and goods used in the industry are never wasted, circling back into the production process in some form. This results in zero waste and protects ecosystems, and natural resources are regenerated.
Within a circular economy model, all materials are kept within the economic system, which also encourages the reallocation of financial resources, thus working towards a more sustainable financial system.
Already, more than one third of Global Fortune 100 firms have committed to, or have plans to inculcate, circular economy goals into their corporate strategies. Adoption of circular economy activities will only increase going into 2025, as it benefits not only companies, but their employees, customers, and communities.
To read more about circular economies and how they can impact a company’s corporate sustainability, head over here.
integration of digital ESG and reporting tools
ESG data collection and reporting has been an upward trend over the past few years, particularly with international standards working as frameworks for national policies, tools to undertake this job that are intuitive, effective, and accurate have also risen in popularity.
As a result, companies are adopting use of software as a service solutions (SaaS) that focus specifically on the collection, dissemination, and reporting of ESG data and other climate change related information.
What is SaaS, you ask?
SaaS is a type of sustainability management software that uses secure cloud computing and manages all the physical and software resources that an application would typically use. Some examples of SaaS include Salesforce, Google Workplace, Microsoft Azure, and so on.
SaaS works through a cloud delivery model where a software provider hosts the application and data on its own servers, networks, computing resources, and databases. This effectively eliminates the resources required for a company to host their own applications in-house, including labour, hardware, software, and all security measures.
ESG SaaS is one of those tools that companies are adopting in their sustainability management programs. ESG SaaS includes data on:
- GHG emissions
- Waste management
- Energy efficiency
- Biodiversity
- Climate change
- Air and water quality
- Water usage
- Deforestation
- Diversity, equity and inclusion
- Employee wages and benefits
- Board compensation and structure
ESG SaaS also populates reports on financial impacts directly related to climate change. To learn more in-depth about SaaS, head over here.
Going forward, ESG SaaS tools will only become more essential to corporate sustainability management systems.
the future of corporate sustainability is here
Companies shouldn’t be held back by antiquated practices and inefficient solutions. The future of corporate sustainability is here, and innovative solutions are an integral part of that.
With the sheer volume of data collection from across facilities and geographies, cloud-based ESG systems designed specifically for corporate sustainability is the solution. The AMCS Sustainability Platform is designed specifically to help your organization comply with all policies, by:
- Streamlining your data collection and centralization of all sustainability information
- Automate accounting and calculations in real-time
- Customize reports to meet the requirements of national and international sustainability policies
Contact us today to find out how AMCS Sustainability Platform can help your company move into 2025 with the right solutions.