Article 1 of 3: What is Sustainability Reporting? The Australian Context
Sustainability reporting is becoming an increasingly essential responsibility for Australian businesses, but its definitions and expectations can be complex. This first article in our three-part series unpacks what sustainability reporting means, its connection to ESG and climate disclosure, and how global and local frameworks shape Australian reporting obligations.
Defining Sustainability Reporting vs. ESG, Climate Disclosure, and CSR
Sustainability Reporting refers to the practice of organisations publicly disclosing their performance and impacts on environmental, social, and governance factors. It provides a non-financial account of how a company operates responsibly—covering metrics like greenhouse gas emissions, energy use, waste, community impacts, and more. The goal is to increase transparency and allow stakeholders to make informed decisions based on a company's broader impacts. Importantly, sustainability reporting is typically structured and recurring (often annually), focusing on measurable outcomes rather than ad-hoc anecdotes.
ESG (Environmental, Social, Governance) Reporting is closely related—in fact, ESG reports are a form of sustainability reporting. ESG emphasises quantifiable metrics in each of the three pillars and is often geared towards investors and regulators. Whereas 'sustainability' can be an umbrella term, ESG provides a formal, quantitative measure of a company's performance in these areas. For example, ESG disclosures might include carbon emissions data, workforce diversity statistics, and governance policies, which rating agencies or investors use to score the company's sustainability performance. A key distinction is that ESG reporting usually ties directly to enterprise value and risk (hence its popularity in finance), while broader sustainability reports can also address community initiatives and qualitative aspects. CSR is about values and intent, ESG is about measured outcomes.
Climate Risk Disclosure is a specific subset of sustainability reporting focused solely on climate change—particularly how climate change poses financial risks (and opportunities) to the business. This concept has been driven by frameworks like the Task Force on Climate-related Financial Disclosures (TCFD). Climate disclosures emphasise governance, strategy, risk management, and metrics/targets related to climate change (e.g., how a company's operations would fare under different global warming scenarios). In Australia, climate risk disclosure is rapidly becoming mandatory for large firms and is often integrated into financial filings. Unlike broad ESG reports, climate risk reports hone in on greenhouse gas emissions (Scope 1, 2, and 3), climate targets, and scenario analysis of physical and transition risks. Essentially, it is the financially material aspect of sustainability reporting, addressing what climate change means for the company's bottom line and long-term viability.
Corporate Social Responsibility (CSR) typically refers to a company's voluntary initiatives and ethical commitments to make positive contributions to society. In practice, CSR efforts might include philanthropy, community programs, employee volunteering, or environmentally friendly practices adopted beyond compliance. Historically, CSR reports were often narrative-driven—highlighting feel-good stories or charitable projects to demonstrate a company's good citizenship. Today, CSR tends to be internally driven (shaping company culture and brand image), whereas ESG/sustainability reporting is externally driven by stakeholder demands for accountability. Moreover, CSR lacks standardised metrics; it's qualitative, whereas ESG/sustainability reports use frameworks and standards for quantitative disclosure. Many experts note that ESG reporting is overtaking CSR as the preferred measure of corporate sustainability because ESG is more data-driven and thus credible to investors.
Key Frameworks and Standards: Australia and International Context
Australia's sustainability reporting landscape sits at the intersection of domestic regulations and global standards. Key frameworks include:
ASIC's Climate Disclosure Regime (ASRS): Australia's mandatory reporting standards being phased in from 2025, aligned with ISSB and TCFD principles.
NGER Act (2007): National Greenhouse and Energy Reporting Act requiring reporting of Scope 1 and 2 emissions by large emitters.
Climate Active Certification: Government-backed voluntary certification of carbon neutrality, enabled directly or via sustainability businesses like SDM-X.
APCO and the 2025 National Packaging Targets: Industry-led packaging sustainability standards with impending mandatory data reporting.
ISO 14064 & ISO 14067: International standards for GHG accounting at the organisational and product level.
GHG Protocol: The most widely used corporate GHG accounting standard globally.
TCFD: Framework for climate-related financial disclosure.
CDP (Carbon Disclosure Project): Voluntary disclosure platform for climate and environmental data.
GRI (Global Reporting Initiative): International framework for sustainability reporting across environmental, social, and governance pillars.
EU CSRD (Corporate Sustainability Reporting Directive): Emerging mandatory standard for companies operating in the EU.
Open 3P: Data standard for packaging sustainability information.
These frameworks create overlapping obligations and opportunities, forming a toolkit businesses can leverage for strategic advantage.
Key Challenges for Australian Businesses in Meeting Reporting Requirements
Australian businesses face several challenges in delivering robust, compliant, and meaningful sustainability reports:
Data fragmentation and collection difficulty: Sustainability data often resides across different business units and systems, making consolidation and validation complex.
Complex regulatory landscape and overlap: Multiple reporting requirements at national and international levels result in duplicated effort and inconsistent submissions.
Industry-specific measurement difficulties: Different sectors face unique hurdles in quantifying and disclosing sustainability impacts (e.g. Scope 3 emissions in supply chains).
Data security and trust concerns: Businesses fear exposing proprietary information through disclosure.
Resource and capability constraints: Many companies lack internal expertise or tools to manage reporting efficiently.
Cultural and change management issues: Embedding sustainability reporting into core operations requires shifts in mindset, process, and accountability.
Understanding the reporting landscape is only the beginning. Read Part 2 of our series to learn about Australia's mandatory sustainability reporting timelines and what's expected of businesses in the coming months and years.
This article was last updated in June 2025
