ASIC's Report 839 reviewed 40 of the 312 sustainability reports lodged for the year ending 31 December 2025 — the first cohort under Australia's mandatory AASB S2 regime. ASIC found no modified audit opinions, but identified eight recurring disclosure gaps, particularly around quantifying financial effects, scenario analysis, and connecting sustainability reports to financial statements. Group 2 entities preparing their first AASB S2 report should address these gaps now.
What ASIC actually reviewed
ASIC's Report 839, released September 2026, is the regulator's first substantive review of Australia's mandatory climate reporting regime in practice. Of the 312 sustainability reports lodged by Group 1 entities with a 31 December 2025 year end, ASIC reviewed a sample of 40 — 20 listed and 20 unlisted — weighted toward higher-emissions sectors: financial services and insurance, oil and gas, and mining.
The headline finding is reassuring on one level: none of the 40 reports had a modified audit opinion, and only two carried an emphasis-of-matter paragraph (both relating to a director's judgement that no climate risks were material). But "no modified opinion" is a low bar. ASIC's real message sits in the eight action items — a working checklist of where even compliant reports fell short of best practice.
Eight gaps ASIC wants fixed before next year's report
Connect the sustainability report to the financial report
ASIC repeatedly found line items in the financial statements — impairments, capex on mitigation — that clearly related to a disclosed climate risk or opportunity, with no cross-reference in the sustainability report. If a number moved because of climate risk, the sustainability report needs to say so explicitly.
Default to quantitative, not qualitative
37.5% of the sample gave only narrative descriptions of financial effects rather than a number or range. 57.5% cited measurement uncertainty as the reason. ASIC's message: measurement uncertainty is a valid reason sometimes, not a default excuse — and if you use it, you must explain why.
Use all reasonable information — past, present and forecast
ASIC flagged entities that had previously disclosed multiple physical risks in voluntary reporting or ASX announcements, then narrowed to a single risk under AASB S2 with no explanation of the judgement applied.
Show your judgement, not just your conclusion
Several reports stated a risk was "not material" with no visible threshold or reasoning behind it. ASIC wants the assumptions shown, not just the answer.
Remember regulatory targets count as climate-related targets
This is a genuinely easy miss: AASB S2's definition of "climate-related target" extends to targets you're legally required to meet — including Safeguard Mechanism obligations. Only 55% of the sample disclosed a climate-related target at all, and many treated Safeguard Mechanism compliance as separate from their AASB S2 targets disclosure.
Don't bury material information under voluntary extras
More disclosure isn't automatically better disclosure — ASIC found reports where the material climate information was harder to find because of surrounding voluntary content.
Cross-referenced material must be static and available
Linking to a paywalled third-party site or a webpage that can change after lodgement doesn't satisfy the requirement that cross-referenced information be available on the same terms, at the same time, as the report itself.
Drop the disclaimers that undercut the report's purpose
ASIC specifically called out disclaimers telling users not to rely on the sustainability report for investment decisions — directly contrary to why the regime exists.
The Scope 3 clock is now running
82.5% of the sample relied on the one-year transitional relief and did not disclose Scope 3 emissions. That relief expires after year one. Entities currently in their first AASB S2 reporting period — and every Group 2 entity approaching its first report from 1 July 2026 — should be building Scope 3 data collection now, not waiting for the relief window to close.
Scenario analysis: the discipline is still forming
65% of entities aligned their climate resilience time horizons with their risk-identification horizons — sound practice ASIC wants to see continue. But only a minority provided the kind of assumption transparency ASIC highlighted as best practice: appendices setting out carbon price assumptions, Safeguard Mechanism assumptions, and physical impact assumptions in one place, rather than scattered or implied.
What this means if you're preparing your first AASB S2 report
For Group 2 entities (reporting periods from 1 July 2026) and Group 3 entities further behind, this report is effectively ASIC's answer key. Every one of the eight action items is fixable at the design stage of a first report — and considerably cheaper to fix now than to correct after ASIC's next surveillance round, which will focus on Group 1 entities with 30 June 2026 year ends.
Frequently asked questions
Sustainability Reporting • September 2026