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Welcome to the October 2025 edition of Herbert Smith Freehills Kramer's Australian ESG bulletin, 'Keeping Up with ESG'.
Our monthly ESG bulletin provides a targeted snapshot of key developments we see as reflecting the "must know" trends in the Australian market. In this edition, we spotlight the announcement of Australia's 2035 emissions reduction target ahead of COP30.
Key highlights
- In the spotlight: Australia sets 2035 climate target ahead of COP30
- Federal Government consults on implementation of Strategy for Nature
- New renewable energy and transmission developer rating scheme
- ASIC and AASB publish materials on AASB S2 and sustainability reporting
- Ad Standards Community Panel dismisses greenwashing complaints
- TerraCom to pay $7.5 million penalty after ASIC whistleblower action
In the spotlight: Australia sets 2035 climate target ahead of COP30
Ahead of the upcoming 30th Conference of the Parties (COP30), on 18 September 2025 the Federal Government released Australia's updated Nationally Determined Contribution (NDC). The NDC includes a new 2035 emissions reduction target of 62-70% below 2005 levels.
The 2035 target is at the lower end of the range considered by the Climate Change Authority (CCA) in its 2024 Targets, Pathways and Progress report, though reflects the CCA's September 2025 advice that a target of 62-70% is Australia's highest possible ambition and achievable.
The NDC is supported by the newly released Net Zero Plan, which is in turn supported by six sector emissions reduction plans covering agriculture and land; the built environment; electricity and energy; industry; resources; and transport. It is expected that the international community will be paying particularly close attention to how Australia works towards its climate ambitions, as Australia continues its campaign to host COP31 with the Pacific in 2026. To read more, see our note below.
As part of Australia's preparation for COP30, in September the Federal Government also released its inaugural National Climate Risk Assessment. The purpose of the National Climate Risk Assessment is to inform Government and business on the current and future risks posed by climate change across key systems in Australia, including communities, defence, the economy, health, infrastructure, the environment and primary industries. Key findings highlight Australia's increasing exposure to extreme weather events and their cascading impacts, with vulnerable communities - particularly those reliant on climate-sensitive industries - identified as most at risk. The assessment also points to risks of rising economic impacts affecting insurance, property, supply chains, and critical infrastructure, as well as escalating health risks and ongoing environmental degradation.
The National Climate Risk Assessment is the first step in adaptation planning as it provides the evidence base for action. The risks identified can inform adaptation and resilience planning for both government and business. This is reflected in the Government's newly released National Adaptation Plan, which establishes a framework for the national response to priority climate risks. The National Climate Risk Assessment is expected to help businesses identify and manage long-term climate risks, as it notes that these risks are often difficult to quantify and may extend beyond traditional financial planning horizons.
Regulators and investors may also look to the National Climate Risk Assessment and National Adaptation Plan to better identify long-term climate risks on their portfolios, which may inform more detailed disclosure requirements, scenario analysis, and resilience expectations.
Federal Government consults on implementation of Strategy for Nature
On 11 September 2025, the Commonwealth Government opened consultation on the implementation plan for Australia's Strategy for Nature 2024-2030, which outlines six national biodiversity targets and three enablers of change in line with the Global Biodiversity Framework. The consultation seeks input on how best to coordinate national efforts, identify key outcomes, and guide collective action across governments, landholders, communities, and the private sector to halt and reverse biodiversity loss by 2030.
This process will also inform the Government's approach to monitoring and reporting progress against these targets, ensuring alignment with international commitments. Organisations are encouraged to share their current actions and highlight areas where further effort is needed, with consultation open until 15 October 2025.
New renewable energy and transmission developer rating scheme
In mid-August 2025, the Commonwealth Government announced it is introducing a new Developer Rating Scheme (DRS) to independently assess and publicly rate renewable energy and transmission developers on their community engagement performance. Using a voluntary, scorecard-based system, the DRS will aim to provide landholders and communities with objective assessments of developer integrity, governance, financial stability and community engagement capability. A public register of compliant businesses is expected by March next year.
ASIC and AASB publish materials on sustainability reporting
ASIC publishes FAQs on audit and assurance requirements for sustainability reporting
ASIC has published a FAQs page to provide guidance on the review and auditing requirements for sustainability reports lodged in accordance with the mandatory climate reporting regime. The FAQs:
- provide a summary of the relevant auditing requirements and what the auditor's report on the sustainability report must contain;
- detail the extent to which the modified liability settings apply to statements in the auditor's report on the sustainability report;
- go into how to manage having a different auditor for the sustainability and financial reports; and
- covers who can conduct a review/audit of the sustainability report, among other topics.
AASB publishes materials on AASB S2
On 2 September 2025, the Australian Accounting Standards Board (AASB) published educational material titled 'Greenhouse Gas Emissions Disclosure Requirements applying AASB S2 Climate-related Disclosures'. This educational material mirrors the structure and content of the International Financial Reporting Standards educational material, which we covered in the June edition of Keeping up with ESG.
On 9 September the AASB also published a short explainer on the proportionality mechanisms available under AASB S2, which largely replicates existing commentary in AASB S2.
Ad Standards Community Panel dismisses greenwashing complaints
In September, Ad Standards continued to be a busy forum for greenwashing complaints. Several recent decisions involved complaints about television advertisements from companies in the energy and resources sector. The complaints generally involved allegations that the advertisements did not accurately represent the full environmental impact and made misleading claims regarding the use of renewable energy or the role of the advertisers in the energy transition.
In each instance, the Ad Standards Community Panel (Panel) dismissed the complaints relating to the television advertisements. In one case, the Panel determined that the advertisement did not involve an environmental claim, and therefore the Environmental Claims Code (which sets out rules for Australian advertisers to ensure their environmental claims are truthful, specific, and supported by evidence) did not apply to the claims made. In two other cases, it was found that the claims were truthful and factual, and unlikely to mislead the target consumer, and therefore did not breach the Environmental Claims Code.
TerraCom to pay $7.5 million penalty after ASIC whistleblower action
On 26 August 2025, the Federal Court declared that TerraCom contravened s 1317AC(1) of the Corporations Act 2001 (Cth) (Corporations Act), which prohibits the victimisation of whistle-blowers, and ordered that TerraCom pay a penalty of $7.5 million. The orders were made pursuant to an agreement between ASIC and TerraCom, with Jackman J finding that the penalty amount, although at the "higher end of the range of appropriate penalties", was an appropriate one in all of the circumstances. In arriving at this conclusion, Jackman J had regard to matters including the nature and extent of the contravention, the loss or damage suffered, and whether TerraCom showed a disposition to co-operate with ASIC.
In particular, Jackman J noted that TerraCom's conduct was "objectively serious" and that the "tone and content" of the three announcements forming the basis for the claim caused detriment, as defined in s 1317ADA of the Corporations Act, in the form of "hurt, humiliation, distress and embarrassment and damage to reputation". With regard to the matter of co-operation with ASIC, Jackman J commented that while TerraCom initially indicated that it would defend the proceedings, any company or person is entitled to defend themselves without risking a higher penalty by doing so than would otherwise be imposed. Thus, Jackman J concluded that the fact TerraCom did not at an earlier point enter into an agreement with ASIC should not count against TerraCom, although generally an admission of contravention is a matter that should be taken into account in determining the appropriate penalty.
To read more about this case, see the discussion in our Insight article.
For clients with a presence in the United Kingdom, South African Development Community or Asia, we also publish trackers of ESG publications and developments for these regions at ESG Notes.
ESG thought leadership
Latest recordings of Third Wheel Podcast Series: ESG in Australia
To read more of our ESG thought leadership, please see:
Our 2024 Unlocking ESG Investment in Australia Report
ESG Notes and Climate Change Notes
ESG, Sustainability and Responsible Business
Written with assistance of Elise Plunket and Charlotte Haling (Head Office Advisory Team), James Moloney, Benita Williams and Paige Mortimer (Environment, Planning & Communities), Alexia Giannesini and Jessie Xiao (Disputes).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
