The Importance of ESG Reporting in 2025
- Srinath Kondapally
- Aug 11
- 3 min read
Updated: Sep 2
In 2025, Environmental, Social, and Governance (ESG) reporting has become a central strategic imperative for Australian businesses. With new laws now in force, sustainability disclosures are no longer a 'nice-to-have'—they are a regulatory must-have. This shift, championed by CPA Australia and enforced by ASIC, marks a turning point for executive teams, investors, and stakeholders seeking robust assurance of corporate resilience, transparency, and competitive advantage.
Regulatory Landscape: The New Standard
Under legislation passed in September 2024, Australia’s largest companies are now legally required to prepare annual climate-related financial disclosures starting from 1 January 2025. This is in line with ASIC’s Regulatory Guide 280 and the Australian Sustainability Reporting Standards (AASB S2). These new rules align Australia’s approach with global standards such as IFRS S2 and the Task Force on Climate-related Financial Disclosures (TCFD). They demand wide-ranging and quantitative reporting on climate risks, opportunities, and greenhouse gas emissions—including Scope 3 supply-chain data from the second year onward.
Disclosures must be included in a ‘Sustainability Report,’ forming the fourth component of the Annual Report, alongside financial, directors’, and audit reports. While the first wave targets Group 1 entities—predominantly ASX 200 companies and large private sector businesses—smaller organisations will follow suit from July 2026 onwards.
ASIC has signalled a pragmatic transition approach for the initial reporting years, recognising the scaling challenge for business leaders. Nonetheless, governance rigour, record-keeping, and proactive stakeholder engagement are now non-negotiable.
Why ESG Reporting Is Essential
Investor scrutiny has intensified. A staggering 97% of major global investment firms now factor ESG metrics into their portfolio and capital allocation decisions. For boards and executive teams, effective ESG disclosure directly impacts corporate credibility, access to capital, and market value.
ESG reporting empowers organisations to respond to regulatory change, manage reputational and transition risk, and drive environmental and social performance. Deeper ESG expertise is actively sought by clients and partners, often via collaborative advisory models. CPA Australia advocates the integration of ESG thinking into broader corporate and financial strategy, reskilling and upskilling accountants and finance professionals for these high-impact roles.
Emerging Trends Shaping 2025
Scope 3 Emissions
Businesses must prepare for comprehensive supply chain emissions reporting. This expands accountability across the entire value chain.
Human Rights and Biodiversity
Disclosures will soon cover anti-slavery risk, biodiversity impacts, and social capital indicators. This ensures holistic ESG transparency.
Technology and AI
Advanced digital tools are now integral for real-time data collection, validation, and reporting accuracy. This enables responsive decision-making and stakeholder dialogue.
Actioning ESG: The Executive Mandate
Australian organisations must act strategically to meet these new requirements:
Prepare Early: Get ready for phased reporting requirements and regulatory supervision.
Educate Teams: Ensure executive teams and internal stakeholders understand ESG frameworks (AASB S2, TCFD) and metrics.
Invest in Infrastructure: Streamline data collection, assurance, and analytics through digital infrastructure.
Leverage Expertise: Engage ESG specialists to establish best practice compliance and strategic integration.
The Future of ESG Reporting
As we look ahead, the landscape of ESG reporting will continue to evolve. Companies that adapt to these changes will not only comply with regulations but also enhance their reputation and stakeholder trust.
The Role of Stakeholders
Stakeholders play a crucial role in shaping ESG strategies. Engaging with them can provide valuable insights and foster collaboration. This collaborative approach can lead to innovative solutions that benefit both the company and the community.
Building a Sustainable Culture
Creating a culture of sustainability within an organisation is essential. This involves training employees, promoting sustainable practices, and integrating ESG principles into everyday operations.
The Importance of Transparency
Transparency in ESG reporting builds trust. Companies that openly share their sustainability efforts and challenges are more likely to gain stakeholder confidence. This transparency can also attract investors who prioritize ethical practices.
Conclusion
Australian businesses face a defining moment: ESG reporting stands as a pillar of future enterprise value, not a discretionary add-on. Leaders who embrace its mandate—through governance, technology, and stakeholder engagement—will future-proof their organisations and drive sustainable growth in an era of unprecedented disclosure.
References:
CPA Australia, "Sustainability Reporting and ESG Trends," 2025
ASIC Regulatory Guide 280, 2025
Automic Group, “ESG Outlook 2025”
HSF Kramer, “Keeping Up with ESG in Australia – 2025 outlook”
Australia Passes Law to Begin Mandatory Climate Reporting in 2025 esgtoday
A director's guide to mandatory climate reporting - AICD
ASIC urges businesses to prepare for mandatory climate reporting - ASIC
Australian sustainability reporting legislation and standards finalised kpmg
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