Climate reporting requirements ramp up across Asia Pacific, says RSM
A report by RSM has revealed that Australia’s climate reporting requirements are aligned with broader regional trends as countries across the Asia-Pacific increase their sustainability efforts.
From January 2025, the first tranche of Australian businesses will be required to complete disclosures relating to their climate change governance, strategy, risk management and goals.
This follows broader regional trends, with neighbours including China, Singapore, Taiwan and Malaysia also implementing mandatory climate reporting policies.
“As climate and ESG credentials become increasingly critical in influencing consumer decisions and driving business investment, companies must rethink sustainability. It’s not just a cost of doing business but an essential part of business evolution,” said RSM Partner Catherine Bell.
Despite pull-back on climate policy rhetoric in the USA, RSM stated that the global drive towards sustainability accountability remains “robust.”
“The global momentum for transparency and responsible business practices continues to accelerate, underscoring the importance of adaptation for companies worldwide,” RSM said in a media release.
Firms may face some challenges in adapting to these new requirements. Mandatory reporting will increase the compliance burden for firms, especially those operating across borders, and businesses will have to tread carefully to avoid greenwashing accusations.
“For businesses operating cross-border, the complex compliance requirements across jurisdictions will be challenging,” said Bell.
“However, companies must proactively address these to avoid being exposed, non-compliant, or uncompetitive.
RSM’s report indicated that the share of Australian companies that had declared net-zero targets rose between 2019 and 2023, but declined in 2024. RSM expects this share to decrease by a further 15 per cent.
Bell attributed this decline to an uptick in greenwashing litigation over the past 18 months, prompting companies to quietly withdraw unsubstantiated net-zero claims.
According to RSM, ASIC has made 47 regulatory interventions to address greenwashing incidents during the 15-month period to 30 June 2024, drawing in over $123,000 in infringement notice payments.
“RSM recommends companies disclosing green credentials and net-zero targets undertake robust assessments to ensure targets are realistic and achievable,” Bell advised, urging companies to avoid greenwashing litigation.
While climate transparency is on the rise, comprehensive disclosure rules are patchy in APAC, according to analysis by the Global Reporting Initiative (GRI).
GRI research indicated that only 21 per cent of companies headquartered in APAC comprehensively applied GRI 207 disclosures, known as the gold standard in global sustainability reporting.
This compares to 62 per cent of companies in Europe, 53 per cent in Africa and 28 per cent in the Americas.
Australia’s country-by-country reporting requirements are an example of tax policy aligned with the GRI 207 framework.
“We acknowledge that reporting is a journey and applaud these leading companies that have taken the decision to make their tax practices more transparent,” said Bastian Buck, GRI Chief Standards Officer.
“The next step is more comprehensive and detailed reporting, which fully reflects how businesses contribute in the countries and communities where they operate.”
The RSM report applauded APAC’s shift towards heightened climate transparency, as governments begin to enforce climate accountability policies.
“This is a multi-generational shift to a new economy. It’s a transformative opportunity for businesses to evolve and contribute to global climate progress. Those that adapt now will become the leaders of tomorrow,” said Bell.
Economic transformation cannot come fast enough, scientists warn, after two major studies found that we may have already breached the Paris Agreement threshold of 1.5 degrees of global warming.
