Financial reporting audit relief doesn’t automatically extend to the sustainability report. Entities seeking audit relief for their mandatory sustainability report must meet the criteria set out by the Australian Securities and Investments Commission (ASIC) in paragraphs 172-183 of Regulatory Guide 280 Sustainability reporting, and must do so in a timely manner.
ASIC’s sustainability reporting and audit relief decisions register includes four entries so far, giving us a flavour of the types of circumstances in which it may or may not grant relief from sustainability reporting and the related audit requirements. All applications sought relief from having to prepare a mandatory sustainability report under section 292A(1) of the Corporations Act 2001.
ASIC rejected three out of four of the entries noted so far on the register. While their circumstances were not identical, ASIC’s main reasons for refusing relief included:
- Allowing consolidated sustainability reporting for a group so as to avoid preparation of multiple sustainability reports, where the group would otherwise not be permitted to prepare consolidated financial statements in accordance with AASB 10 Consolidated Financial Statements, conflicts with the connected information requirements under Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures.
- Partnership ‘parents’ are not legal entities and can, therefore, not be a parent under Australian Accounting Standards. For this reason, they cannot prepare consolidated financial statements, and are unable to apply the relief from preparing sustainability reports of subsidiaries under section 292A(2).
- It is not considered an unreasonable burden for a parent entity whose sustainability reporting obligations are triggered earlier than its subsidiaries to prepare a standalone sustainability report under section 292A(1). This is because the entity could avoid the administrative costs and complexity by preparing a consolidated sustainability report for an earlier period under section 292A(2).
The table below provides more information on each decision (sourced from the register in March 2025).
Date of relief instrument decision | Relief given or refused | Reasons for ASIC’s decision | Conditions for relief | Duration of relief |
19 June 2025 | Granted relief to three wholly owned Group 1 entities of a registered superannuation entity (RSE) so that they don’t have to prepare a sustainability report for the first mandatory reporting year. All three wholly owned entities are unlisted companies, have no material external operations, and primarily provide internal support services to entities within the RSE group. The RSE satisfies the sustainability reporting threshold for Group 2 and is, therefore, only required to prepare a mandatory sustainability report in the following year. Under AASB 10 Consolidated Financial Statements, the RSE is required to prepare consolidated financial statements that include wholly owned entities. The wholly owned entities do not require relief in subsequent reporting periods because the RSE intends to elect to prepare a consolidated sustainability report for the consolidated group under section 292A(2). | ASIC were satisfied that the costs of preparing standalone audited sustainability reports for just one financial year would impose unreasonable burdens on the wholly owned entities. This is because:
| The financial reports of each of the subsidiaries contain a summary of the relief provided. | One financial year |
19 November 2025 | Refused relief from the requirement to prepare sustainability reports for four entities within an Australian corporate group for the financial year ended 31 December 2025. Each of the four entities is a large proprietary company that currently lodges individual Chapter 2M financial reports and meets the sustainability reporting requirements in its own right. Relief was sought because one of the four entities will prepare a sustainability report that includes the other three entities. That is, emissions within the value chain are better represented through a combined sustainability report at this proposed level. None of these entities controls the other three entities. Relief was required because these entities do not (and do not propose to) prepare consolidated financial reports under AASB 10. | ASIC was not satisfied that compliance with the relevant sustainability requirements would impose unreasonable burdens on each entity. This is because:
| N/A | N/A |
21 November 2025 | Refused relief to three entities from the requirement to prepare sustainability reports for the financial year ended 31 December 2025. The entities are large proprietary companies, and each lodge individual Chapter 2M financial reports. Relief was sought on the basis that their parent, an Australian partnership, prepares a consolidated sustainability report for the Australian corporate group. The partnership comprises three Australian and three foreign incorporated entities with equal interests, and as such, control is not vested in any single corporate partner. The parent prepares financial reports under a partnership agreement, and there is no legal requirement for partnerships to prepare and lodge general-purpose financial reports or sustainability reports with ASIC. | ASIC was not satisfied that compliance would impose unreasonable burdens on each entity because:
| N/A | N/A |
24 November 2025 | Refused relief to an entity from the requirement to prepare a ‘standalone’ parent only sustainability report for the financial year ending 31 December 2025 (FY25). As permitted under section 292A(2), the entity intended to lodge a ‘standalone’ parent-only rather than a consolidated sustainability report in FY25. The entity is the parent company of an Australian group that lodges consolidated financial reports under Chapter 2M. It also had one subsidiary that is a Chapter 2M reporting entity and is not required to prepare sustainability reports until the financial year ending 31 December 2026 (FY26). The entity argued that because it would be the only entity required to report in FY25, and its subsidiary would not be required to lodge sustainability reports until FY26, the administrative burden of preparing a standalone parent-only sustainability report justified relief. | ASIC was not satisfied that compliance with the relevant sustainability requirements would impose unreasonable burdens on the parent entity because:
|
Note that the register contains some, but not all of ASIC’s decisions regarding sustainability reporting relief applications under Chapter 2M of the Corporations Act 2001.
Prior to seeking relief
ASIC encourages applicants to review the register before submitting a relief application, as it provides valuable insight into the factors it takes into account during the decision-making process. In other words, if you have a similar set of circumstances to one of the decisions above, it may not be worth your while making a relief application when there is a good chance that it will be rejected.
Timing of relief applications
ASIC is urging applicants to begin their sustainability reporting relief applications before the applicable statutory deadline. For example, an unlisted Group 1 entity with a 31 December 2025 year-end has a statutory reporting deadline of 30 April 2026.
Applications lodged close to the statutory deadline may not allow sufficient time for ASIC to fully consider the application and, as a result, it could be refused.
ASIC’s powers to grant relief are prospective, so ASIC has no power to grant retrospective relief. If the unlisted Group 1 entity fails to obtain relief from its sustainability reporting obligations prior to the statutory deadline of 30 April 2026, it will have breached its lodgement obligations under section 319, and relief received after this date will not remedy this past breach.
