Australia / Guides / The climate reporting safe harbour: what "modified liability" actually covers
Australia · guideThe climate reporting safe harbour: what "modified liability" actually covers
The short answer
The modified liability ("safe harbour") settings in section 1707D of the Corporations Act protect specific forward-looking statements in a sustainability report — Scope 3 emissions estimates, climate scenario analysis, and transition plan disclosures — for financial years starting from 1 January 2025 up to and including a financial year starting before 1 January 2028. During that window, no one but ASIC can bring an action over a protected statement (other than a criminal proceeding), and even ASIC is limited to injunctions and declarations, not damages. Because the window is fixed to the calendar rather than reset for each entity's own first report, a Group 1 entity reporting from January 2025 gets close to the full three years of cover, while a Group 3 entity whose first sustainability report is for a year starting 1 July 2027 gets only the tail end of the same window before ordinary liability applies. The shield does not touch governance disclosures, the accuracy of current-year Scope 1 and Scope 2 emissions, or materiality assessments — those sit under standard Corporations Act liability from the first report onward, and the shield only applies inside the sustainability report itself, not in a directors' report, an investor presentation, or any other document.
Key facts — verified dates on each
What section 1707D actually protects
Section 1707D — inserted into Part 10.77 of the Corporations Act 2001 by the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 — gives "protected statements" limited immunity from private legal action. A protected statement is a forward-looking climate disclosure required by Chapter 2M's sustainability reporting provisions: Scope 3 greenhouse gas emissions estimates, climate scenario analysis, transition plans, and the assumptions and inputs those disclosures rely on. ASIC's Regulatory Guide 280, published to explain how the settings work in practice, treats the protection as attaching to the statement only where it sits inside the sustainability report proper and is a disclosure the Act actually requires — not a voluntary addition made beyond what AASB S2 asks for.
The mechanism is a liability gate, not an exemption from disclosure. An entity still has to make the Scope 3 estimate, run the scenario analysis, and set out the transition plan; section 1707D only changes who can sue over what is disclosed and what they can ask a court for while the window is open.
The window is calendar-fixed, not reset per entity
The protection runs for financial years commencing on or after 1 January 2025 and applies up to a financial year commencing before 1 January 2028 — a fixed three-calendar-year span from when the regime started, not three years counted from each entity's own first sustainability report. That distinction matters because Australia phases the reporting mandate in by entity size across three groups with three different start dates.
A Group 1 entity, first required to report for a financial year starting on or after 1 January 2025, sits inside the protected window for close to its full first three reporting years. A Group 2 entity, first reporting from 1 July 2026, has roughly eighteen months of the window left by the time its obligation begins. A Group 3 entity, first reporting from 1 July 2027, has only the closing months of the window before the calendar cutoff arrives — its later reporting years fall outside modified liability entirely, even though they are still its first, second, and third years of reporting.
- Group 1 (FY from 1 Jan 2025): window covers close to the full first three reporting years
- Group 2 (FY from 1 Jul 2026): window covers roughly the first eighteen months of reporting
- Group 3 (FY from 1 Jul 2027): window covers only the closing months before it lapses
Who can act, and what they can ask for
Inside the window, no action, suit, or proceeding can be brought over a protected statement other than a criminal proceeding or an action brought by ASIC — private litigants, including shareholders and class-action funders, are shut out of civil claims over those specific disclosures for as long as the window applies to that entity's reporting year. This is what "only ASIC can enforce it" means in practice: the shield does not remove liability, it narrows who is allowed to pursue it.
Even ASIC's own remedies are capped during the window: proceedings it brings over a protected statement are limited to injunctions and declarations, not damages or civil penalties in the ordinary sense. RG 280 is explicit that this is not blanket immunity — a statement that is misleading, deceptive, deliberately false, or reckless does not gain protection just because it appears inside a sustainability report, and the shield only ever attaches to the statement in that report, not to the same claim repeated in a directors' report, an operating and financial review, or an investor presentation.
What the shield does not cover
Three categories sit outside section 1707D from the first reporting year, regardless of group: governance disclosures (how the board and management oversee climate risk), the accuracy of current-year Scope 1 and Scope 2 emissions figures, and the entity's materiality assessment of which climate risks and opportunities to disclose at all. Ordinary Corporations Act liability — including private action — applies to those from day one, which is also why AUASB's own assurance phase-in starts with governance and Scope 1/2 in an entity's first assured year rather than leaving them for later.
The practical read for a board is that the safe harbour buys time on the hardest-to-verify forward-looking numbers — Scope 3 in particular, which depends on supplier and value-chain data most entities do not yet control directly — while leaving the parts of the report a board can already substantiate (governance process, current direct emissions, the materiality call) under normal scrutiny throughout.
Assurance phases in on its own timetable, independent of the liability window
AUASB's ASSA 5010 sets a separate phase-in for third-party assurance over sustainability reports, structured by the same three entity groups but on its own clock, not tied to the section 1707D liability window. Assurance starts as limited assurance (an auditor's review, not a full audit) in an entity's first assured year, covering governance, strategy, and Scope 1 and 2 emissions; limited assurance then extends to the full report — including Scope 3, scenario analysis, and transition plans — for the following years.
Reasonable assurance (audit-level) is phased in group by group, reaching Group 3 — the last and largest cohort to move — for financial years commencing on or after 1 July 2030. Because assurance and modified liability run on separate timetables, an entity can reach reasonable assurance on a Scope 3 disclosure years after the section 1707D window protecting that same disclosure has already closed for its group — the liability shield does not wait for assurance to catch up.
The figures, and when we checked them
These numbers change by year or by notification. Each one shows the date we last verified it against the source — if that date looks old, check the source before relying on it.
Questions on this
What does the climate reporting "safe harbour" actually protect?
Forward-looking statements required inside the sustainability report itself: Scope 3 greenhouse gas emissions estimates, climate scenario analysis, and transition plan disclosures, plus the assumptions those rely on. It does not exempt an entity from making the disclosure — only from most legal action over it while the window applies.
Does every entity get three years of safe harbour protection?
No. The window is fixed to financial years commencing from 1 January 2025 up to a financial year commencing before 1 January 2028 — the same calendar span for every entity, not three years counted from each entity's own first report. Group 1 entities, reporting from January 2025, get close to the full window. Group 3 entities, first reporting from July 2027, get only the closing months before it lapses.
Can shareholders or other private parties sue over a protected statement during the window?
No. Inside the window, only ASIC can bring an action over a protected statement, other than a criminal proceeding. Private civil claims — including shareholder class actions — are excluded for that statement while the protection applies.
What can ASIC actually seek if it does act during the window?
Injunctions and declarations only — not damages or the broader range of civil penalty orders available for other Corporations Act breaches.
Does the safe harbour cover governance disclosures or Scope 1 and 2 emissions?
No. Governance disclosures, the accuracy of current-year Scope 1 and Scope 2 emissions figures, and the entity's materiality assessment sit outside section 1707D from the first reporting year and remain subject to ordinary Corporations Act liability.
Does a statement stay protected if it also appears outside the sustainability report?
No. The protection attaches to the statement inside the sustainability report. The same content repeated in a directors' report, an operating and financial review, or an investor presentation does not carry the same protection.
Does a misleading or reckless statement still get protection?
No. ASIC's guidance is explicit that the shield is not blanket immunity — a statement that is misleading, deceptive, deliberately false, or reckless is not protected just because it sits inside a sustainability report.
How does the assurance phase-in relate to the liability window?
They run on separate timetables. AUASB's ASSA 5010 phases assurance in by entity group, reaching reasonable (audit-level) assurance for Group 3 from financial years commencing 1 July 2030 — well after the section 1707D liability window has closed for that group's later reporting years.
Primary sources
- ASIC — Who must prepare a sustainability report?
- ASIC — Modified liability settings
- ASIC — Regulatory Guide 280: Sustainability reporting
- AUASB — ASSA 5010 timeline for audits and reviews of information in sustainability reports
- Federal Register of Legislation — Corporations Act 2001, Part 10.77 (sustainability reporting transitional provisions, incl. s1707D)
Last reviewed 2026-08-15. Statutes and schedules change — the sources above are authoritative, this page is orientation.
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