Approval of assurance standards provides further certainty on climate reporting

On Tuesday, the AUASB approved the Australian Standard on Sustainability Assurance (ASSA) 5000 General Requirements for Sustainability Assurance Engagements and ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001.

The AUASB said the new standard contributes to greater international alignment of assurance over climate and other sustainability information. It also supports confidence in information disclosed in the annual reports of Australia’s largest companies from years commencing 1 January 2025.

CA ANZ reporting and assurance leader, Amir Ghandar, said the approval of sustainability assurance standards by the AUASB this week was a watershed moment for sustainability and climate risk assurance in Australia,” he said.

“Voluntary reporting on sustainability issues has sometimes been dismissed as a glossy market exercise, but robust reporting standards and a clear pathway to mandatory assurance move these critical topics into the domain of investment grade market information.”

“Australian investors have increasingly demanded reliable and consistent reporting on climate and sustainability – with dependable assurance key to increasing confidence in the reporting."

An investor confidence survey conducted by CA ANZ revealed that nearly 80 per cent of investors would feel more confident and secure in sustainability information if it was mandatorily prepared and assured in accordance with agreed standards.

The newly mandated climate reporting and assurance standards will require corporates and professional audit firms to focus on the resourcing required to prepare and audit a whole new set of information alongside financial reports, the body said.

“There will be demand for talent who have the skills to undertake assurance across the thousands of entities that will come into the mandatory climate-related disclosure regime in the coming five years," said Ghandar

“While most of the very large companies captured by the legislation in the next two years have been already working to get ahead of the curve on climate reporting and assurance, there is a sizable cohort of smaller, private businesses reporting from 2027 that will have a much bigger gap to bridge in developing the resourcing, internal capabilities and systems.”

“CA ANZ has been closely engaged with the government and the standard setters, and we recognise they’ve listened and offered some transitional reprieve, such as slightly relaxing timeline for reasonable assurance over the transitional period.”