HOW TO GET READY FOR ASRS - AUSTRALIA

GET READY HOW TO FOR ASRS A Practical Guide to Mandatory Sustainability Reporting in Australia

As custodians of the built world, we believe that we should never settle for the world as we know it but constantly drive forward towards a more sustainable one, every day. We stand by our practical approach to go beyond the hype of future missions and goals, encouraging clients to take simple steps each day. This is why we’ve created the How-to Guides Series – a set of clear, actionable how to items you, the owner or occupier, can do right now to make your asset or even organisation more sustainable and better optimised to handle what tomorrow brings. BETTER FUTURE BEGINS NOW

By taking action, we can ensure better future begins now.

WHERE DO I BEGIN?

KNOW WHAT IT IS AND WHY IT MATTERS.

As global momentum grows for bolder climate action, organisations face increasing pressure to decarbonise and adopt more sustainable practices. New laws will mandate that Australian corporations lodge climate-related financial disclosures with the Australian Securities & Investment Commission (ASIC) to improve transparency of climate-related planning and identification of risks and opportunities. The new reporting requirements, known as the Australian Sustainability Reporting Standards (ASRS), are based on the International Financial Reporting Standards (IFRS) with localised modifications. ASRS provides a framework for reporting under four pillars:

Governance

Strategy

Risk Management

Metrics and Targets

This guide is designed to help real estate owners, occupiers and investors understand their incoming reporting obligations. Importantly, it outlines steps to developing data management, reporting capabilities and internal processes that will be integral to compliance.

KNOW WHO MUST REPORT.

Starting with Australia’s largest corporates and cascading down to smaller groups, this regulatory change will eventually affect approximately 6,000 entities. As the thresholds are lowered between 2025 and 2028 and more companies must comply, the standards will extend further across the economy than previous reporting standards.

What reporting group do I belong to? Entities that meet two of three criteria

When is the first reporting year?*

Calendar year reporters

Financial year reporters

Data collection starts: 01-Jan-25 First reporting period: 01-Jan-25 to 31-Dec-25 Report in 2026 Data collection starts: 01-Jan-26 First reporting period: 01-Jan-26 to 31-Dec-26 Report in 2027

Data collection starts: 01-Jul-25 First reporting period: 01-Jul-25 to 30-Jun-26 Report in 2026 Data collection starts: 01-Jul-26 First reporting period: 01-Jul-26 to 30-Jun-27 Report in 2027

1. Consolidated revenue: $500m+ 2. EOFY consolidated assets: $1b+ 3. Employees (FTE): 500+

When do I need to lodge with ASIC?

GROUP 1

* Also includes NGERS reporters

Publicly listed corporations: 4 months after end of respective financial year

1. Consolidated revenue: $200m+ 2. EOFY consolidated assets: $500m+ 3. Employees (FTE): 250+

GROUP 2

NGERS reporters: 31 October of reporting year

*Also includes asset owners with $5b+ under management

Group 1-3 entities: 3 months after end of calendar or financial year

Data collection starts: 01-Jan-27 First reporting period: 01-Jan-27 to 31-Dec-27 Report in 2028

Data collection starts: 01-Jul-27 First reporting period: 01-Jul-27 to 30-Jun-28 Report in 2028

1. Consolidated revenue: $50m+ 2. EOFY consolidated assets: $25m+ 3. Employees (FTE): 100+

GROUP 3

KNOW WHAT TO REPORT.

If your organisation meets ASRS criteria, you will be required to lodge climate-related financial disclosures as a standalone ‘sustainability report’ alongside annual financial reports. If you have not gathered or reported this information before, or have done so under voluntary or flexible reporting arrangements, you likely have significant work ahead of you to prepare.

It is anticipated that a ‘sustainability report’ will contain the following

• The climate statement for the year: ο Material climate-related financial risks and opportunities ο Metrics and targets covering scope 1, 2 and 3 emissions ο Governance and risk management processes, controls and procedures • Notes to the climate statement • Any statements prescribed by the regulations for the year • Under the draft ASRS, report content is to be audited before lodgement • The directors’ declaration that statements are compliant Under the ASRS framework, reporting will be organised around the four key pillars and broadly focus on:

Governance Disclosures on the processes, controls and procedures used to monitor and manage climate-related risks and opportunities.

Strategy Disclosures on the strategy to address climate risks and opportunities, including impacts on modelling and planning.

Risk Management Disclosures on material climate related risks and opportunities and how these are integrated into the broader risk management strategy.

Metrics and Targets Disclosures of scope 1, 2, and 3 emissions using methods under the NGERS or other international standards. Includes quantitative and qualitative climate-related targets.

It is typically time- and resource-intensive to capture and analyse climate-related risks and opportunities. Understanding the financial impacts on your business adds another layer of complexity. That’s why starting early and building robust governance foundations is important.

WHAT STEPS SHOULD I TAKE?

We have outlined five typical steps organisations should follow to prepare for ASRS. This process will help you create certainty around your obligations and ensure the right teams and processes are in place as you work towards reporting.

and

CHECK YOUR OBLIGATIONS STEP 1

STEP 1 CHECK YOUR OBLIGATIONS

Whether you are domiciled locally or are a multi-national company, the natural first step is to review your Australian entity’s structure and reporting boundaries to see where you fit within the applicable thresholds. This will determine which, if any, reporting group you belong to and will help you understand the timelines for data collection and reporting and, crucially, the expected lodgement deadlines. Where there is uncertainty, you should consult with your legal team and seek board acknowledgement. Once you confirm which group applies to you, it is time to raise organisational visibility about what’s to come. Depending on the complexity of your organisation, meeting ASRS obligations will need consultation, cooperation and input from multiple business functions. Engaging, informing and educating leadership and relevant stakeholders in the early stages of the process will establish a constructive starting point.

STEP 2 CONVENE YOUR TEAMS

STEP 2 CONVENE YOUR TEAMS

ASIC is already encouraging subjected corporations to commence work immediately rather than waiting for legislation to be passed. While certain details may change, the broad parameters of ASRS are clear, allowing organisations to begin work now. Depending on your internal systems, processes and resources, corporations may require six months or longer to complete the early steps of this process. Given these lead times, it is essential to identify the leaders, experts and teams that will guide compliance imperatives. This can include establishing a working group with representatives from legal, finance, risk, sustainability, procurement and operations to identify the cross-functional impacts and responsibilities of reporting.

STEP 3 IDENTIFY AND BRIDGE THE GAPS

STEP 3 IDENTIFY AND BRIDGE THE GAPS

The next step is to run a gap analysis to review your state of readiness and pinpoint the areas that need an uplift.

First, you must understand where your data is and how to get it. You’ll need to look at what you are currently collecting and what is required under ASRS. This will highlight what additional data you need and opportunities to work towards best practice data collection and management.

STAGE ONE focuses on your current data and reporting practices. The following questions can help guide you: 1. Do I already gather and report data? If yes, does it align with ASRS requirements? If no, you are likely starting at a lower baseline and need more time to prepare. 2. Do I have scope 1, 2 and 3 emissions sources identified? With multiple data sources, you can select those that need to be reviewed and that require regular consolidation. 3. Are my data sources disclosure ready? This is a litmus test to see whether you could categorise and report your disclosures in line with other international standards organised around the four pillars (governance, strategy, risk management, targets and metrics). 4. Is my data auditable? Though the details are pending, ASRS will require reporting assurance – either via third-party testing of the completeness and accuracy of your data and systems or through robust internal processes. Historically, many organisations have voluntarily audited their data, though many have not. 5. Have I excluded certain data types that are now required? Scope 3 emissions data is a common gap for many organisations. It is also worth reviewing organisational boundaries such as joint ventures and partnerships to confirm data coverage.

It’s important to remember that data collection and quantification is an iterative process rather than an annual activity.

STAGE TWO focuses on analysing and translating the data into business risks and opportunities. This step involves making sense of the data you’ve collected and demonstrating you can pinpoint the associated risks and opportunities for disclosure to ASIC. The following questions can help guide you: 1. Am I able to translate climate risks to financial risks? For example, if you’re a property developer, are you land banking in locations presenting potential climate risks such as extreme weather events? These risks would need to be quantified and disclosed. 2. Can I quantify climate-related opportunities? In addition to evaluating the risks, quantifying and disclosing the opportunities is also important. For example, are there opportunities to generate new sources of value and revenue streams for investors or tenants?

It’s now time to develop a strategic plan to address identified gaps, which could include:

Assignment of responsibilities

Milestone development

Budget allocation

Outline cross-functional collaborative requirements

Actions to close the gaps will vary. For your organisation, this may be streamlining data collection; for others, it may be to build out the internal working group to better understand the required metrics or to engage a consultant to assist in the reporting process. With a rigorous approach to collecting, analysing and reporting climate-related data, you have the framework to optimise your broader sustainability plan and mitigate climate risks. A key goal of ASRS is to drive transparency and comparability across organisations. As such, you should anticipate questions from investors and stakeholders about how you stack up against peers or other industry players. While this is not a regulatory obligation, it will likely be a common practice as reporting drives further competition across the industry.

STEP 4 SIMULATE SUCCESS

STEP 4 SIMULATE SUCCESS

Given the complexity of the reporting scheme, it is wise to complete a ‘dry run’ ahead of your official lodgement date. For most groups, this will be 12 – 18 months prior to the reporting deadline, allowing time to adjust processes if needed. This should focus on the following: 1. Data coverage, accuracy and completeness, and the processes used to close off the reporting period. 2. How you analyse and quantify the risks and opportunities. 3. Whether you have an agreed procedure for sharing reporting information with senior leadership for sign-off. 4. Engaging with your auditor to ensure you understand what evidence and process documentation will be required.

ASRS reporting is no different from financial reporting, so you can include the same steps and timing considerations, such as alignment with Board meetings or input from external auditors.

Think about assurance Assurance for your data is expected to be a feature of the reporting requirements. This will begin with limited assurance for scope 1 and 2 emissions data from year one. The higher standard, known as reasonable assurance, will be mandatory from year four onwards, however, adopting this standard early on is recommended to provide deeper insight into your data coverage and more time to improve. Your ‘sustainability report’ must also be assured by your financial advisors to ensure the accuracy and reliability of disclosures.

Get board sign-off The report also requires both board approval and a directors’ declaration. Plan ahead, as Board and Director sign-off processes may take additional time, especially if these disclosures are new to your organisation. What happens if I don’t lodge? Given the regulatory requirement to lodge your sustainability report, penalties will apply for non-compliance. ASIC has a penalty

relief period which will be in effect during the transition period, from the commencement of the legislation in financial year 2026 through to 2028. At present, it is not known what penalties will be in place for non-compliance following this transition period.

STEP 5 PLAN FOR CONTINUOUS IMPROVEMENT

STEP 5 PLAN FOR CONTINUOUS IMPROVEMENT

Despite the less stringent requirement and the penalty-relief period offered by ASIC in the early stages, it makes sense to plan for a more demanding endpoint from the outset. This is where you can leverage data collection and analysis tools and technologies that, once in place, can automate and consolidate information into a single repository, simplifying and speeding up the reporting process. Aligning efforts to higher ambitions from the start sets your organisation on the path to continuous improvement while smoothing the transition into an increasingly complex reporting environment. Remember, the regulation is designed not just to force organisations to report data but to drive transparency and influence behaviour across the economy. So, getting a handle on your data is important, but analysing and making demonstrable steps towards decarbonisation and better risk management can enhance market positioning.

TAKE THE NEXT STEP STEPS YOU NEED TO TAKE:

WHERE WE CAN HELP:

STEP 1: CHECK YOUR OBLIGATIONS

• Assessment of organisational boundaries and reporting requirements

• Advisory support on creating cross-functional teams • Preparation and situation analysis support

STEP 2: CONVENE YOUR TEAMS

• Data management & reporting gap analysis • Analysis of climate risk impacts

STEP 3: IDENTIFY AND BRIDGE THE GAPS

STEP 4: SIMULATE SUCCESS

• Calculation of GHG emissions and climate risk data during ‘dry-run’ process

STEP 5: PLAN FOR CONTINUOUS IMPROVEMENT

• Ongoing data collection and automation for reporting

Creating your Sustainability Strategy We help you develop and implement strategies to tackle challenges, meet stakeholders’ expectations and corporate responsibilities while delivering positive environmental and social impact. SERVICES INCLUDE: • Baselining and benchmarking • Materiality assessments • Vision and objectives • Goal and target setting • Strategies and roadmaps

Ensuring Compliance We help you navigate the complex compliance minefield from energy auditing and energy performance,

Managing Climate Risk Our team and technology partners help you understand the potential impact of climate change on your assets and portfolio. You can then better identify, manage and disclose climate-related risks and opportunities. SERVICES INCLUDE: • Climate risk scenario analysis • Climate risk scores and assessments • Risk mitigation strategies and plans • TCFD reporting & EU taxonomy advisory • ASRS advisory & reporting

Delivering Net Zero We can help you understand your baseline, assess performance, and optimise your path to net zero. We work alongside our peers across our business to implement the necessary policies and processes that enable action. We then help you achieve net zero. SERVICES INCLUDE: • Net zero audits • Net zero strategy and roadmaps • Policies & processes • Procurement programs • Project management • Continuous improvement plans

climate-related risks and opportunities, and broader ESG reporting mandates.

SERVICES INCLUDE: • Data management and reporting • ESG compliance programs • Carbon accounting • Building benchmarking and mandatory audits • ESG compliance reporting

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GET READY HOW TO

FOR ASRS A Practical Guide to Mandatory Sustainability Reporting in Australia

ABOUT CUSHMAN & WAKEFIELD Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.

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