What happens if we do not lodge?

The sustainability report is part of your Chapter 2M annual reporting, so failing to prepare or lodge it contravenes the Corporations Act and ASIC can act. ASIC has said enforcement is most likely where an entity fails to prepare a report at all, or where misconduct is serious or reckless.

What is the modified liability period and what does it protect?

For financial years commencing between 1 January 2025 and 31 December 2027, statements in your sustainability report about Scope 3 emissions, scenario analysis and transition plans can only be actioned by ASIC or in criminal proceedings. Broader forward-looking climate statements had the same protection only for financial years commencing during 2025. Both windows are closed-ended and neither renews.

Are directors personally liable for climate disclosures?

Directors carry their ordinary care and diligence duties in relation to the sustainability report, and they sign a declaration about it. A temporary and partial protection applies to some forward-looking content, but it is narrower than it is usually described and it is closing. This is the one answer that should be read together with your own legal advice.

Glossary›Regulation, capture and thresholds / Regulation, capture and timing›ASIC enforcement and penalties (climate disclosure)

Glossary term

Cluster B · B19

Tier 1 · differentiator

ASIC enforcement and penalties (climate disclosure)

Definition

ASIC administers the sustainability reporting requirements and can act on failure to lodge, on deficient disclosure and on misleading statements, using the same powers that apply to financial reporting. Its powers include infringement notices, stop orders, directions to correct, civil penalty proceedings and criminal prosecution. ASIC action is expressly preserved during the modified liability period.

Corporations Act 2001 (Cth)

· Chapter 2M enforcement provisions, ss 1041H and 1308, ASIC Act s 12DA, RG 280 Section E ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Timing and relief
Sources
Related terms
Related questions

Cluster

B · Regulation, capture and thresholds / Regulation, capture and timing, 26 terms

In practice

Three distinct exposures sit under this heading and they behave differently.

Failure to lodge. A sustainability report not lodged within the section 319 deadline is a contravention of the Corporations Act. It is administratively visible (ASIC can see a missing lodgement without investigating anything) and it is the one exposure that is impossible to argue about. It is also completely outside the modified liability protection, which covers statements made in a report, not the failure to produce one.

Deficient disclosure. A report that does not comply with AASB S2 is a report not prepared in accordance with the Act. ASIC has a surveillance function over financial and sustainability reports and can require corrections. For a first-time reporter the realistic exposure is a query and a remediation rather than a penalty, which is consistent with the pragmatic and proportionate supervision posture ASIC has stated for the transition.

Misleading statements, including greenwashing. This is the live enforcement area and the one carrying real money. ASIC has pursued greenwashing through the misleading and deceptive conduct provisions, and the penalties have escalated: $10.5 million against Active Super, $12.9 million against Vanguard, and $7.3 million against Fiducian Investment Management Services in 2026: the last being the first such outcome against a managed fund operator for failures in governance, compliance and oversight of ESG claims. Those cases concerned financial products rather than Chapter 2M sustainability reports, but the conduct provisions they were brought under apply to statements in a sustainability report equally, and the modified liability settings do not shelter misleading conduct.

One specific ASIC position worth knowing. ASIC has stated that disclaimers denying responsibility for, or reliance on, a sustainability report are impermissible, because they conflict with the statutory framework. A boilerplate disclaimer copied from a voluntary ESG report into a statutory sustainability report is a problem in itself.

The penalty quantum attaching to a failure to lodge a sustainability report is set by the general Chapter 2M enforcement provisions rather than by a bespoke sustainability penalty, and the applicable amount depends on the provision engaged and on the penalty unit value at the time. An entity facing an actual or likely late lodgement should get the exposure quantified on advice rather than from a published figure, because the number moves with the penalty unit indexation and with which provision ASIC elects to use.

The practical point for a board is that the three exposures have very different profiles. Late lodgement is certain and provable. Deficient disclosure is likely to be remediated. A misleading statement is the one that produces a court, a penalty and a media release, and it is the one the modified liability period does not touch.

What the assurer does with it

The assurer does not enforce and does not report contraventions to ASIC as a matter of course in this engagement. Where they identify a material non-compliance they raise it with management and those charged with governance, and an unresolved material misstatement produces a modified conclusion, which is itself lodged with ASIC and is visible. That is the practical mechanism by which a disclosure problem reaches the regulator. Separately, the assurer will read the whole sustainability report, including unassured voluntary content, for material inconsistency with the assured information and with the financial report, which is how a promotional claim sitting beside a statutory disclosure gets caught before ASIC sees it.

Commonly confused with

The modified liability period, which restricts private litigation over specified statements and expressly preserves ASIC’s ability to act. There has never been a period in which ASIC could not act. Also confused with ACCC enforcement of environmental claims under the Australian Consumer Law, which is a separate regulator on separate provisions and can be engaged by the same conduct.

Timing and relief

ASIC has said it will take a pragmatic and proportionate approach to supervision and enforcement while industry adjusts to the new requirements, set out in Section E of RG 280. That is a statement about how ASIC will prioritise its resources during transition. It is not relief, it is not a deadline extension, it does not bind ASIC in any particular case, and it has no stated end date. It should not be planned around as though it were an exemption.