ESG Global Vision

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Corporate Governance, financial reporting, non-financial reporting

Voluntary standards

ASX-listed entities and other entities regulated by ASIC

ASIC formally recommends that listed companies with material exposure to climate risk follow the TCFD recommendations in relation to climate-related disclosure. It considers that the law requires an operating and financial review to include a discussion of climate risk when it is a material risk that could affect the company’s achievement of its financial performance.

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Non-financial reporting, Environmental policy

In force

Amendments to relevant calculation methodologies are currently proposed.

Corporations that meet a NGER threshold must register and, once registered, report each year.

The yearly threshold for a single energy facility is:

• 25 kt or more of greenhouse gases (CO₂-e) (scope 1 and scope 2 emissions),
• production of 100 TJ or more of energy, or
• consumption of 100 TJ or more of energy.

The current yearly threshold for corporate groups is:

• 50 kt or more of greenhouse gases (CO₂-e) (scope 1 and scope 2 emissions).
• production of 200 TJ or more of energy, or
• consumption of 200 TJ or more of energy.

Establishes the National Greenhouse and Energy Reporting scheme which introduced a single national framework for reporting and disseminating company information about greenhouse gas emissions, energy production, energy consumption and other information.

Non-financial reporting, Environmental policy

In force

ASX-listed entities

The ASX Listing Rules require disclosure of information that would have a material effect on the price or value of an entity's securities (ASX Listing Rule 3.1). This generally applies to information that would influence an investor's decision to acquire or dispose of securities. In some circumstances, this may extend to environmental, social and sustainability performance information.

Recommendation 7.4 of the ASX Principles and Recommendations states that:

"A listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks."

Directors who fail to consider the impacts of climate change risk for their business now could risk being found liable for breaching their statutory duty of due care and diligence.

Modern Slavery

In force

Importers

This bill aims to prevent importers from importing goods to Australia that have modern slavery at any part of their supply chain.

There is a global ban on such imports, and any importer found culpable of such can face significant fines.

Non-financial reporting, environmental policy, social policy, corporate governance

In force

ASX-listed entities

The Corporations Act creates a continuous disclosure obligation for listed and other disclosing entities.

For entities subject to any particular and significant environmental regulation, the annual directors' report must disclose details of an entity's performance in relation to environmental regulation (section 299(1)(f)). This requirement generally applies where a reporting entity holds an environmental licence or is otherwise subject to licence or approval conditions for the purposes of environmental regulation.

Institutions that offer financial products with an investment component must disclose in the relevant Product Disclosure Statement, "the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of the investment" (section 1013D(1)(l)).

Social policy, corporate governance

In force

Institutional investors and financial intermediaries

The SIS Act imposes a fiduciary duty on trustees to act honestly, to properly invest funds, to ‘act in the best interests of the beneficiaries and to exercise a prescribed standard of care, skill and diligence and to give priority to beneficiaries where there is a conflict of interest’. Guidance notes published by the prudential regulator, the Australian Prudential Regulatory Authority,  have stated that these duties may, in some circumstances, extend to ‘ethical or sustainable’ investment options.

Social policy, corporate governance

In force

All entities who employ an Australian workforce

The national workplace relations system establishes 10 minimum National Employment Standards that must be provided to all employees covered by the Fair Work Act.

Non-financial reporting, social policy, corporate governance

In force

Non-public sector employers with 100 or more employees

Establishes the Workplace Gender Equality Agency and requires employers subject to the terms of the act to lodge reports each year containing information relating to various gender equality indicators (for example, equal remuneration between women and men).

Non-financial reporting, social policy, corporate governance

In force

Australian entities and foreign entities (whether commercial or not for profit) carrying on business in Australia with a consolidated annual revenue of AUD$100 million and greater.

Entities based or operating in Australia which have an annual consolidated revenue of more than A$100 million are required to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks.

Other entities based or operating in Australia may also report voluntarily.

Statements are submitted to the Minister on the Modern Slavery Statements Register. Statements on the register may be accessed by the public, free of charge, on the internet

Corporate governance

In force

Range of businesses, shareholders and industry groups

The primary role of the Council is to develop and issue principles-based recommendations on the corporate governance practices to be adopted by ASX listed entities. The recommendations are intended to promote investor confidence and to assist listed entities to meet stakeholder expectations in relation to their governance.

Corporate Governance, social policy

Voluntary Standards

Both lenders and borrowers across global loan markets who invest in Australia

In April 2021, the APLMA, LMA and LSTA published a set of 'Social Loan Principles' which aim to facilitate and support economic activity which mitigates social issues and challenges, and/or achieves positive social outcome (SLPs). The SLPs set out a high-level framework of market standards and guidelines which should be met when entering into a 'social loan'. The four key determinants of a social loan are identified as:

1. Use of Proceeds;
2. Process for Project Evaluation and Selection;
3. Management of Proceeds; and
4. Reporting.

In March 2022, the APLMA, LMA and LSTA released further guidance in relation to the SLPs, which addresses many of the common questions and concerns raised about the social loan framework.

Corporate Governance, financial reporting, non-financial reporting

Voluntary Standards

APRA Regulated Institutions, being, authorised deposit-taking institutions (ADIs), registrable superannuation entities (RSEs) licensees (RSE licensees), general insurers, life companies (including friendly societies), private health insurers, authorised nonoperating holding companies (NOHCs).

In November 2021, APRA published Prudential Practice Guide CPG 229 Climate Change Financial Risks, setting out specific best practice recommendations for best practice for climate risk disclosures for institutions operating in the prudential sector. CPG 229's recommendations include that:

• Companies should voluntarily disclose decision-useful, forward-looking climate risk information.
• The Task Force on Climate-related Financial Disclosure's framework is a sound basis for disclosure.
• The absence of absolute certainty in regard to climate risk should not deter companies from disclosure.

Disclosure processes should undergo continual review and evolution in an effort to meet changing and increasing exceptions in relation to climate-related disclosures.

Corporate Governance, financial reporting, non-financial reporting

Voluntary Standards

ASX-listed entities and other entities regulated by ASIC

The Governance Institute of Australia's Climate Change Risk Disclosure Guide provides assistance for ASX-listed entities and others to report against Recommendation 7.4 (material exposure to environmental or social risks) of the ASX Corporate Governance Council’s Principles and Recommendations. It suggests that reporting be done in accordance with the TCFD recommendations in relation to climate-related disclosure.

Corporate Governance, financial reporting, non-financial reporting

Voluntary Standards

Report preparers, assurers and auditors

In late 2018, the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB) issued joint guidance on assessing climate-related risks in the context of financial statement materiality.

This guidance detailed how entities are to disclose the impact of climate change and other emerging risks in their financial reporting. It also set out that a failure to do so may leave corporations and their directors increasingly exposed to claims for breach of duty and/or misleading disclosure under the Corporations Act.

The key recommendations are that entities preparing financial statements in accordance with Australian Accounting Standards consider:

• Whether investors could reasonably expect that emerging risks, including climate-related risks, could affect the amounts and disclosures reported in the financial statements and have indicated the importance of such information to their decision making.

What disclosures about the impact of climate-related risks are material to the financial statements in light of the guidance in APS 2 (APS 2 provides a decision tree that sets out considerations in assessing materiality).