October 2025 ESG Policy Update—Australia

Australian Update

ASIC Commences Proceedings Against the Responsible Entity of an ESG Investment Fund for Misleading Conduct

On 3 October 2025, the Australian Securities and Investments Commission (ASIC) initiated civil penalty proceedings against a responsible entity (RE) in the Supreme Court of New South Wales, alleging significant governance failures and misleading conduct concerning its Environmental, Social and Governance (ESG) investment fund (Fund).

ASIC's allegations centre on the RE's failure to act with the requisite care and diligence as the responsible entity of the Fund. The Fund's Product Disclosure Statement (PDS) stated that investments would be made in companies that aim to be positive for society and for the environment and aim to avoid investments in harmful activities. However, ASIC contends that the RE failed to act with care and diligence by:

• Not reviewing the Fund’s underlying investments to ensure they aligned with its PDS;
• Not identifying or managing ESG-related risks in its compliance documents;
• Not following its own risk management framework, including PDS review procedures; and
• Not engaging an ESG expert to monitor the Fund.

ASIC also alleges that the RE breached its compliance plan by failing to record and lodge investor complaints and by not addressing concerns about investments in major mining, oil, and gas companies that conflicted with the Fund's stated objectives. This lack of oversight and transparency is seen as a breach of the RE's governance duties.

ASIC Deputy Chair Sarah Court emphasised the importance of robust governance frameworks for ESG funds, stating that entities must ensure their sustainability-related claims are well-founded and transparent. This case marks ASIC's fourth greenwashing civil penalty action, highlighting the regulator's proactive stance in holding entities accountable for alleged ESG-related misrepresentations.

Major Australian Bank Provides AU$2 Billion in Green Business Lending

On 6 October 2025, a major bank in Australia (Bank) announced that it had provided more than AU$2 billion in 'green business lending' as part of a commitment to deliver AU$80 billion in environmental financing between FY2024 and FY2030.

The AU$2 billion green finance package is in response to burgeoning demand for sustainable investments across various sectors, including electric vehicles, sustainable agriculture, and energy-efficient property upgrades. The Bank contends this funding has facilitated the adoption of emissions-reducing technologies and energy-efficiency upgrades, particularly among small and medium-sized enterprises, which are now accessing sustainable finance options previously reserved for larger corporations.

Queensland Government Unveils its 2025 Energy Roadmap

On 10 October 2025, the Queensland Government released its Energy Roadmap 2025 (Roadmap), outlining a strategic plan for the state's energy sector over the next five years. A significant focus of the Roadmap is the continued role of coal in Queensland's energy mix.

Despite the global shift towards renewable energy, the Roadmap indicates that state-owned coal generators will operate at least until the end of their technical lives, with potential extensions based on system needs, asset integrity, and economic viability. This approach suggests that coal will remain a key source of energy generation in Queensland throughout the 2030s and into the 2040s.

The Roadmap's emphasis on coal is partly due to the state's reliance on coal-fired power, which currently supplies more than 60% of Queensland's total energy demand. The Queensland Government has committed AU$1.6 billion through the Electricity Maintenance Guarantee to ensure the reliability of these assets. This investment aims to maintain state-owned coal assets and ensure they can operate as needed into the future.

However, the Roadmap also acknowledges the need for a transition towards more sustainable energy sources. It highlights the importance of private sector investment in renewables, gas, and storage to achieve a balanced energy mix that supports affordability, reliability, and sustainability.

In summary, while the Roadmap continues to support coal as a significant energy source, it also sets the stage for increased investment in renewable energy and storage solutions, aiming to balance the state's energy needs with environmental sustainability goals.

ASX to Disband its Corporate Governance Council

On 16 October 2025, the Australian Securities Exchange (ASX) announced the disbandment of its Corporate Governance Council (Council) following an unsuccessful attempt to revise its corporate governance principles earlier this year. The decision was influenced by an independent review that identified the Council's structure as cumbersome and unable to achieve consensus among its 19 members. The Council, which included representatives from business, investor, and superannuation groups, faced criticism earlier this year for its inability to agree on the 5th edition of its Corporate Governance Principles including whether to recommend that boards report on diversity characteristics beyond gender, such as sexuality, age, indigenous heritage and disabilities.

Such changes were supported by various institutional investor and financier groups but resisted by the director community–emblematic of a deepening fissure on 'ESG' issues between stakeholder vs director-centric governance.

In response to these challenges, the ASX will now assume primary responsibility for establishing guidelines on key governance issues, such as board structure, risk management, disclosure requirements and executive remuneration. The Council will be replaced by a secretariat within the ASX, overseen by a smaller advisory group. This advisory group will hold regular meetings to address emerging governance issues and conduct formal reviews every four years, marking a shift from the previous ad-hoc approach.

The dissolution of the Council and the establishment of a new governance structure aims to streamline decision-making processes and foster the development of balanced governance principles. The Business Council of Australia welcomed the ASX's move and plans to also consult its members on improving corporate governance practices.

View From Abroad

European Parliament Votes to Scale Back Sustainability Reporting and Due Diligence Laws

On 13 October 2025, the European Parliament's Legal Affairs Committee voted to revise the European Union's (EU) sustainability reporting and due diligence regulations, marking a shift in corporate accountability standards. The agreement, part of the EU Commission's Omnibus I initiative, proposes substantial reductions in the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Under the new framework, the CSRD would apply only to companies with at least 1,000 employees and an annual revenue exceeding €450 million, a notable increase from the previous threshold of 250 employees. The CSDDD would apply to only those firms with at least 5,000 employees and a turnover of more than €1.5 billion, effectively excluding smaller enterprises from these requirements. This adjustment reflects a strategic move towards a "risk-based approach" in due diligence.

The European Parliament will soon commence tri-lateral negotiations with the European Council and the European Commission with a view to reach a final agreement on the revised rules by the end of 2025. However, the revised rules are not anticipated to be implemented until 2026.

United Kingdom Plans to Create 400,000 Clean Energy Jobs by 2030

On 19 October 2025, the United Kingdom's Government published its Clean Energy Jobs Plan, aiming to create 400,000 new roles by 2030 to boost the clean energy sector and address the growing demand for skilled workers in this field.

Central to the plan is a comprehensive workforce upskilling initiative, which includes the establishment of five new Technical Excellence Colleges. These institutions will focus on training young people for essential roles in the clean energy sector, such as electricians, welders, and engineers. Additionally, the plan allocates £20 million to retrain oil and gas workers for new clean energy roles, assisting a smoother transition for those affected by the shift towards renewable energy.

The plan also emphasises job quality, with new labour protections and a Fair Work Charter focussed on working conditions and pay. This includes extending employment protections to offshore renewable workers and embedding workforce criteria in energy-sector grants.