Speaking at an industry event on Tuesday, he highlighted the regulator’s focus on mandatory climate reporting due to become law following royal assent.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, which sets out the framework for Australia’s first climate-related financial disclosure regime, passed Parliament on 9 September.
Starting 1 January 2025, this legislation will impose mandatory climate reporting requirements on Australia’s biggest listed and unlisted companies and financial institutions, with other large businesses to be phased in over time. It is expected to apply to over 6,000 entities once fully implemented.
“Compliance teams will obviously play a crucial role in ensuring that their organisations are able and ready to meet these new reporting obligations,” Longo said.
The executive previously described the introduction of a compulsory climate risk disclosure regime as “the biggest change in Australia in financial reporting and disclosure standards in a generation”.
Detailing how the regulator plans to tackle compliance with the regime, he explained that the Australian Securities and Investments Commission (ASIC) intends to be “proportionate and pragmatic” in its approach, allowing the industry to acclimate to new requirements.
“We know these reporting standards are new and that some disclosures are novel – perhaps more forward-looking than those required to be disclosed under other periodic financial reporting obligations,” Longo said.
“We also know there will be a period of transition as industry continues to build capability and implements the organisational changes that will be required to comply with the regime. We understand this.”
He encouraged firms to begin preparing early and consider how such disclosures can be integrated into existing risk and compliance measures.
In contrast, ASIC’s stance on greenwashing remains strict.
The regulator made nearly 50 regulatory interventions targeting greenwashing in the 15 months leading up to 30 June 2024, including civil penalty proceedings against Active Super and Vanguard Investments Australia, and a $11.3 million penalty against Mercer Super.
“Our greenwashing work involves a focus on sustainability statements being made voluntarily by entities about their green credentials,” Longo said on Tuesday.
“As I’ve said many times before, this work is based on the long-standing prohibition against misleading and deceptive conduct and comes back to ensuring that you do what you say you are going to do.”
Quoting Justice Horan’s judgment in the Mercer Super case, Longo said it is vital for consumers in the financial services industry to have confidence in ESG claims made by providers of financial products and services.
