Should climate disclosures be in a standalone report?

Your climate disclosures (called climate statements) have to be part of your general purpose financial reports, for the same reporting entity, covering the same period and published at the same time as your financial statements, so a separate sustainability report issued later in the year does not work. But the statutory Sustainability Report is itself a distinct report, lodged with ASIC on its own form, and ASIC expects it to be presented separately and clearly distinguished from everything around it. Most Group 1 entities included it inside their annual report rather than publishing it separately.

What this means in practice

Which document it sits in is a presentation choice. Neither the Corporations Act nor ASIC expressly requires the sustainability report to be inside the annual report. ASIC's Regulatory Guide 280 positions it as the fourth report in the annual report, alongside the financial report, the directors' report and the two auditor's reports, and it is lodged on its own form, Form 398, at the same time as the financial report on Form 388.

Most Group 1 entities bound it into the annual report rather than publishing it separately.

The timing, the period and the entity are fixed. AASB S2 requires the disclosures to be part of your general purpose financial reports (paragraph 60), reported at the same time as the related financial statements and for the same period (paragraph 64), and for the same reporting entity (paragraph Aus20.1). A sustainability report published three months after your annual report fails all three.

Wherever it sits, the statutory boundary has to be visible. Paragraph 62 permits the required information to sit in the same location as other content provided the climate-related financial disclosures remain clearly identifiable and not obscured. RG 280 goes further where you add voluntary sustainability information, suggesting an index table in a prominent location identifying the mandatory disclosures. This is a liability question as much as a presentation one, because the modified liability settings attach to the mandatory climate disclosures and not to voluntary content beside them.

Cross-referencing is the real flexibility, but it has a price. Under paragraph 63 with paragraphs B45 to B47, material information can be included by cross-reference if it is available on the same terms and at the same time, the complete set of disclosures is not made less understandable, and the cross-reference is to a precisely specified part of a clearly identified report. The price is paragraph B46: cross-referenced information becomes part of your climate-related financial disclosures, and whoever authorises the general purpose financial reports takes the same responsibility for it as for information included directly. Pulling in a glossy sustainability report brings its claims inside the regime.

Name the financial statements the disclosures relate to. Paragraph 22 requires you to identify them, and paragraph 23 requires the data and assumptions to be consistent with those used in the financial statements as far as the accounting standards allow. This is the connection assurance providers test first, and it is easy to miss when the climate section is drafted by a different team.

Your working papers are evidence, not disclosure. Your climate risk assessment report, risk register, methodology documentation, emissions inventory and governance paper are evidence, not disclosure. They will be requested in assurance, but none of them is required to be published.

Common mistakes

Inconsistent numbers in the climate disclosure and the financial statements. Paragraph 23 requires consistency, and an unexplained difference is a finding rather than a query.
Cross-referencing a report that is not yet published. Paragraph B45(a) requires the cross-referenced information to be available on the same terms and at the same time.
Cross-referencing content that isn’t intended to be audited. As soon as content is referenced, it will be scrutinised.
Carrying over ESG report disclaimers. ASIC has said disclaimers that conflict with the statutory framework are not permitted, and identified disclaimers in or near sustainability reports telling users not to rely on them.
Repetition. It's tempting to structure your climate disclosure as a checklist, but this can often lead to duplicated content which means more pages to audit. Keep it concise.

Trace's viewpoint and approach

Treat your climate disclosure as a statutory report that happens to be about climate, not as a communications asset.

The real decision is not where the report sits but how clearly it is marked. Trace offers a clearly structured template including a checklist per section and examples.

Keep that evidence somewhere the disclosure can point back to.Trace stores all evidence, including meeting transcripts and email communications, in our Compliance Hub, ensuring that the Disclosure can be audited efficiently.

Whether you draft the report yourself from our disclosure template or we draft it with you, every statement traces back to its source, and an assurance request is answered by following a link rather than by reconstructing how a number was reached.

Frequently asked questions

Q: Is it unusual to publish the climate disclosures in the same document as the annual report? No, it is the common pattern. Advisers reviewing the first wave of Group 1 reports found that many early reporters integrated the climate disclosures into their annual report rather than issuing a separate sustainability report. The report still has to be a clearly identified statutory report within it, and it is still lodged with ASIC on its own form at the same time as the financial report.

Q: We already publish a sustainability report. Can the climate disclosures just live there? Not if it is published separately or later. The climate statements have to be part of your general purpose financial reports, for the same entity and period, published at the same time as your financial statements. You can include information by cross-reference to your sustainability report if it is published on the same terms at the same time and the cross-reference is precise, but that information then becomes part of your climate-related financial disclosures and carries the same responsibility.

Q: Do we have to publish our risk register? No. What is required is the description of your material climate-related risks and opportunities and the disclosures built on them, not the register, the scoring or the workshop material. Expect all of it to be requested in assurance.

Q: We have a confidential acquisition that responds to a climate opportunity. Can we leave it out? Possibly, under the commercially sensitive information exemption, but the conditions are narrow: not already public, serious prejudice to the economic benefits, and no way to disclose at an aggregated level that would still meet the objective. You must disclose that you have used the exemption and reassess each year. It is not available for risks. Take legal advice before relying on it.

Q: Can we put the compliance index in a separate document? Yes, and it usually reads better there. Keep it published at the same time so it can be cross-referenced properly, and remember it is a map rather than a disclosure in its own right.

Relevant links

This is general information about the ASRS regime and is not legal advice. Reliance on the exemptions for legally restricted or commercially sensitive information should be discussed with your legal adviser and auditor.