For any new reporting regime, additional care must be taken to ensure compliance with the requirements of the legislation, standards and any regulatory guidance. Many reporting entities will choose to obtain external legal advice to support them in understanding the scope of their reporting obligations and preparing and reviewing their sustainability reports.
Gilbert + Tobin has been providing support for reporting entities to navigate the legal issues relating to this new mandatory reporting framework. Our sustainability team has been closely following and advising clients on the development of the regulatory framework and accompanying standards and regulatory guidance. Based on this experience, and our decades working in the climate and sustainability space and advising on climate-related risk disclosures since the adoption of the Recommendations of the Taskforce on Climate related Financial Disclosures, we have identified some of the key legal issues for entities in the mining and resources sector to consider when preparing sustainability reports.
1. Who must submit a sustainability report? Identifying the right reporting entity or entities.
These questions will be of particular relevance to mining and resources companies, which often have complex corporate structures and supply chains spanning multiple jurisdictions. Particularly given the attention focused on this sector by regulators and the public, it will be crucial to ensure that these decisions are made in accordance with the legislative requirements and, where subjective judgement is required, this may require the support of external advice.
(a) Do you need to prepare and submit a sustainability report?
By now, most companies will be aware of whether they need to prepare a sustainability report, and which reporting group they are likely to fall within. However, the approach to reporting can be difficult to navigate. As a general rule, if you are reporting under Chapter 2M of the Corporations Act 2001 (Cth) (Corporations Act) and trigger the financial or emissions reporting thresholds (which captures almost all large proprietary companies and reporting entities under the National Greenhouse and Energy Reporting Act 2007 (NGER Act)), you will be required to report.
See our latest insight on the climate-related financial disclosure regime for further details on the reporting thresholds and preparation of a sustainability report.
(b) Which entities should be included in the sustainability report?
For companies with global operations, parent companies, subsidiaries (including Australian and foreign) or joint ventures, it will be important to consider which entity or entities should be included in a sustainability report. For entities with minority shareholdings in other entities, or that have joint ventures, these questions can require careful legal analysis and advice.
For instance:
Should the company report emissions and climate-related risks for the entire corporate structure, consolidating all subsidiaries?
Or are separate reports prepared for certain group entities or sub-groups?
How should the company report on the interests it holds in joint ventures?
This may require consideration of how the company currently files its financial reports with the Australian Securities and Investments Commission (ASIC) and the coverage of its reports to the Clean Energy Regulator under the NGER Act. Reporting entities will also need to balance the regulatory burden of preparing separate reports against the benefits of that approach, along with the obligation to avoid unnecessary duplication within sustainability reports.
ASIC’s Regulatory Guidance RG 280 Sustainability Reporting (RG 280), finalised in March 2025, provides some guidance for reporting entities with complex and multinational corporate structures. For example, a consolidated sustainability report under s 292A(2) of the Corporations Act cannot be prepared by a foreign parent entity on behalf of a consolidated entity for a financial year; and sustainability reporting requirements crystallise at the end of the financial year, with completed acquisitions or corporate restructures during the financial year capable of resulting in a change to the entity’s reporting status.
(c) Opportunities for relief
In some circumstances, a person may be able to apply to ASIC for relief from sustainability reporting obligations. ASIC has prescribed statutory powers under the Corporations Act to provide relief in certain circumstances, which is to be interpreted in light of RG 280. A company wishing to understand if any relief is available, and the steps involved, may need to obtain legal advice.
2. Board oversight and governance of climate risk
The Australian Accounting Standards Board has adopted the Australian Sustainability Reporting Standard for Climate-related Financial Disclosures (AASB S2) which requires disclosures about governance as a key issue related to how entities are managing their climate-related risks and opportunities. A governance body can include a board, committee or equivalent body charged with governance.
For mining and resources companies, this will often require careful consideration of the appropriate roles and committees that have been established within the corporate and board structure. For instance, is there a climate change expert sitting on any risk and / or investment committees? Is climate-related risk formally included in board papers? Does the board have a skills matrix and is climate expertise included?
(a) Reporting on governance structures
The company must disclose how the board and senior management are overseeing climate risks and how the company’s risk management processes account for climate-related risks. For example:
Who on the board or in senior management is responsible for overseeing climate risk?
What is the formal reporting structure?
How often are reports provided, by whom, and to whom?
The board will need to ensure that the company is integrating climate risk into its overall risk management framework and making decisions about its climate strategy. In a large corporate group, this may require additional consideration of oversight and approach to strategy, particularly as these may apply to subsidiaries and joint ventures.
3. Directors’ duties
Directors of mining and resources companies will need to be conscious of their companies’ approach to understanding the full range of impacts of climate change on their businesses, as well as the opportunities that it might present. Physical impacts will be key, including access to resources, the availability of water, impacts on workforces and the dependence on global supply chains. Extreme heat will be an important factor to consider as a climate-related risk, but directors may also identify it as a potential work, health and safety issue that must also be carefully considered and managed. Transition risks will also be significant, particularly as to the scale and pace of decarbonisation and how a company’s business and investments map to various scenarios.
(a) Directors’ declaration
The sustainability report must contain a directors’ declaration as to whether the sustainability report is compliant. For the first three years, the declaration must state whether, in the directors’ opinion, the entity has taken reasonable steps to ensure the substantive provisions of the sustainability report are in accordance with the Corporations Act. After that period of time, a higher standard will apply, being whether, in the directors’ opinion, the substantive provisions of the sustainability report are in accordance with the Corporations Act, including with the AASB S2 sustainability standards.
In making these declarations, directors should take into account their directors’ duties, and may seek legal advice as to the whether the oversight and governance as disclosed is consistent with those duties.
In particular, directors should consider their obligation to discharge their duties with reasonable care and diligence, and the extent to which any decision relating to managing climate risks which is disclosed in the sustainability report aligns with that duty.
They may also seek advice on whether their decisions on how to manage climate-related risks and opportunities could be defended as ‘business judgments’.
This could require testing the evidence available to support the contents of the sustainability report, along with the efforts made by the board and individual directors to inform themselves about the subject matter. The choice and applicability of different scenarios will be an important aspect of this process. Documenting these processes will be an essential measure for managing legal risks.
Directors might also consider taking advice on the business’s decisions made as to materiality within the climate statements, to ensure that these are legally sound.
4. Consideration of sustainability disclosures in other documents
While preparation of sustainability reports will need to be in compliance with the Corporations Act and accompanying standards, reporting entities will also need to be cognisant of how they are publicly disclosing sustainability related information outside of their sustainability report.
ASIC’s guidance in RG 280 is particularly useful in this respect. For example, in the context of disclosure of sustainability statements in a prospectus, RG 280 clarifies that:
Where a sustainability report has been submitted under Chapter 2M, a copy should accompany a prospectus.
Disclosure in a prospectus should adopt the definitions for terms in AASB S1 and S2 and align with the disclosure principles in Annexure D to AASB S1 and S2.
Sustainability-related disclosures should be incorporated throughout the body of the prospectus, including in the business model and investment risks sections of the prospectus.
Where sustainability-related information is required to be disclosed in certain materials outside of a sustainability report, such as in a prospectus disclosure document, that information may be considered a protected statement under the modified liability regime to the extent it is the same as the statement included in the sustainability report.
However, sustainability information disclosed in most other external publications will not be protected and, in all circumstances, any sustainability information disclosed on a voluntary basis will not be protected. Care should be taken to ensure that all statements are accurate, verifiable and consistent with any protected sustainability statement in a sustainability report.
Companies may wish to seek legal advice to confirm the applicability of any modified liability under the reporting regime.
5. Role of the General Counsel
The General Counsel will likely be involved in overseeing the preparation and drafting of the sustainability report.
The General Counsel may seek external advice on appropriate legal oversight of the preparation process to ensure compliance and mitigate legal risks.
This advice could also assist in ensuring that in-house legal teams are prepared to defend disclosures if challenged.
6. Greenwashing risks
The Corporations Act provides some short-term relief for litigation brought in respect of:
Claims relating to climate which at the time they are made are about the future, such as emissions reductions or net-zero targets (12 months).
Statements made about scope 3 greenhouse gas emissions, scenario analysis or a transition plan for the purpose of complying with the AASB S2 (3 years).
During the relief periods, litigation can only be commenced by ASIC or for criminal matters. This prevents litigation being brought by investors, consumers or strategic litigants based on misleading or deceptive statements contained in the sustainability reports for the first transitional period.
Nevertheless, greenwashing risks exist in respect of many aspects of the sustainability report and ASIC may take action if it identifies problematic disclosures or omissions.
Some key high-risk areas are:
Decisions about materiality.
Assumptions around the future use of credits or offsets, or alternative energy sources, as well as the particular attributes and risks of those credits or energy sources.
Characterisation of certain operations as ‘green’, ‘low carbon’ etc.
Statements around transition risk, and the extent to which they are based on thorough knowledge and sound understanding of the highly specific legislation and regulation relating to energy and emissions.
Statements included in other reports that may not be protected by ASIC’s relief.
Holistic understanding of the impacts of a business and climate change on physical risks, such as availability of water and natural resources.
Entities may decide to obtain external legal advice to review their disclosures to manage the risks of future greenwashing allegations, or legal or regulatory actions. The particular drafting of disclosures can make a material difference to the degree of greenwashing risk, both in terms of the likelihood of any claim and the ability to defend it.
Gilbert + Tobin has extensive experience advising on all aspects of these issues and can assist entities in preparing and finalising their sustainability reports.