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 state of work.
Key highlights
- Staying ahead of the curve: The latest trends in employment, industrial relations, and safety
- EU and US sustainability reporting developments:
- Cancelled: Fifth Edition Corporate Governance Principles and Recommendations
- Greenwashing continues to be a key focus for regulators
- Private member whistleblower protection bills introduced to Parliament
- Future Made in Australia: Critical minerals & hydrogen production tax incentives now law
- Federal Government appoints fugitive methane emissions expert panel
- ASFI releases the Australian Sustainable Finance Action Plan 2025 – 2027
Staying ahead of the curve: The latest trends in employment, industrial relations, and safety
Recent whistleblower developments
In the last few weeks, we have seen first two judgments handed down in the Federal Court regarding whistleblower protections. These judgments contain detailed and substantive considerations of the interpretation and application of the amendments to Part 9.4AAA of the Corporations Act 2001 (Cth). These judgments highlight the challenges for companies, directors and those managing potential disclosures in navigating whistleblower protections and defending against alleged breaches. At the same time, the judgments also provide important guidance on the parameters of the protections. To read more, see our note.
For a full summary of the cases, issues and implications for employers, companies and directors, you can request a copy of our full briefing note.
The long-awaited Victorian Psychosocial Health Regulations are here
On 21 February 2025, the Allan Labour Government provided a long-awaited timeframe for the introduction of the Psychological Health Regulations in Victoria, anticipating that the regulations will be made in October 2025 and will take effect from 1 December 2025.
In May 2021, the Victorian Government announced its commitment to introduce regulations to address psychological health in the workplace and it consulted on draft regulations in 2022. Despite Victoria being one of the first States to announce a draft reform, the proposed regulations sat idle for the intervening years, while WorkSafe Victoria has relied on the ‘general duties’ under the Victorian Occupational Health and Safety legislation to regulate in this area. Meanwhile, all other Australian states and territories have introduced regulations in this space.
As currently proposed, the key changes when the regulations come into effect will be as follows:
- Clarified requirements and increased focus: The proposed regulations will clarify requirements on employers to identify psychosocial hazards in the workplace and control associated risks to health and safety. As such, there will likely be even more emphasis on the topic.
- Documentation requirements: Employers will need to prepare a written prevention plan where certain psychological hazards are identified in the workplace. Notably, there is a parallel between this requirement and the new obligation in Queensland for employers to have a written sexual harassment prevention plan from March 2025.
- Reporting requirements: Applicable employers will be required to report ‘reportable psychosocial complaints’ to WorkSafe Victoria every six months.
These last two elements set Victoria apart from the other jurisdictions.
The proposed regulations were made in response to recommendations in the Boland Review in 2018, the Royal Commission into Victoria’s mental health system in 2019, and the Productivity Commission inquiry into mental health in 2020, to better address mental health in the workplace by strengthening health and safety laws.
Employers will need to understand the proposed changes in Victoria and plan how to implement them in their business to ensure compliance. A Compliance Code and additional regulatory guidance will be issued to assist employers on how to meet their obligations in this area.
Reminder of emerging technology-facilitated work health and safety risks
A recent survey funded by the Federal Government and commissioned by Our Watch, a not-for-profit organisation focussed on prevention of violence against women, found significant workplace safety issues are affecting talent recruitment and retention. A key concern arising from the findings relates to workplace technology-facilitated sexual harassment (WTFSH). The survey revealed that 83% of females and 67% of males would consider leaving a job if workplace sexual harassment wasn't treated seriously. Furthermore, 75% of women and 44% of men considered gender equality to be a key consideration when job hunting. This trend has prompted the Office of the eSafety Commissioner to warn that the scope of WTFSH was rapidly evolving and expanding, particularly with the advancement of computer editing tools which enables easier fabrication of fake sexual images or sexualised deepfakes. Recent Our Watch research showed that 40% of workplace leaders are unaware of their legislative duty to proactively prevent workplace sexual harassment under the Sex Discrimination Act 1984 (Cth), and only 76% were aware that workplace sexual harassment was illegal.
Businesses, now more than ever, should educate senior leaders about their positive obligation to prevent sexual harassment under discrimination laws. It is no longer sufficient to respond to unlawful conduct that has already occurred – rather, businesses need to be proactive to promote a more positive workplace culture and to avoid any regulatory action. This is particularly the case as unique work health and safety risks are emerging as technology evolves.
Parliamentary Report: The Future of Work – Inquiry into the Digital Transformation of Workplaces
A government inquiry in the digital transformation of workplaces has recommended that employers should be statutorily barred from using AI to make decisions affecting workers without "human oversight", while the FWC should review the National Employment Standards in response to "significant job redesign" by the technology. These changes are among 21 recommendations contained in ‘The Future of Work – Inquiry into the Digital Transformation of Workplaces’ Report by the House of Representatives Standing Committee on Employment, Education and Training, which considered the implications of the ‘rapid uptake’ of automated decision-making and machine learning on the workplace. Other recommendations in the Report include:
- that SafeWork Australia develop ‘a Code of Practice that identifies and addresses specific work health and safety risks associated with AI and automated decision-making’;
- that the government encourage employers and peak employer bodies ‘to address job displacement as a result of automation’; and
- strengthening employers’ obligation ‘to consult workers on major workplace changes before, during, and after the introduction of new technology.’
These recommendations are the result of the inquiry finding that Australia's regulatory landscape is "not sufficient to deal with the impacts" of automated decision making and AI on workplaces, and the technologies enable "excessive and unreasonable" surveillance and data-collection by employers. The inquiry highlighted that digital transformation exposed significant risks, including gaps in Australia’s regulatory frameworks and workplace protections. In addition to these guardrails, which are designed to implement risk management processes, evaluate the performance of AI models and enable human control or intervention in systems where required, the inquiry also recommended updates to the Privacy Act 1988 (Cth) and the Fair Work Act 2009 (Cth) to protect worker data and privacy. In particular, the inquiry stated that the Fair Work Act 2009 could be amended to “improve transparency, accountability and procedural fairness regarding the use of AI and [automated decision-making] in the workplace.”
Whilst AI brings many advantages to the workplace, businesses should exercise a degree of caution when implementing its use, particularly with respect to employee surveillance and data collection, to ensure that it fully complies with its obligations under relevant laws. Employers should be conscious of the work health and safety risks (for example, psychosocial risks) as the use of AI in the workplace becomes more widespread to ensure that it addresses these risks as they arise.
EU and US sustainability reporting developments
United States of America: Pause on the legal defence of the SEC climate disclosure rule
On 11 February 2025, the Acting Chair of the U.S. Securities and Exchange Commission (SEC) issued a statement announcing the SEC was pausing its defence against legal challenges brought against its Enhancement and Standardization of Climate-Related Disclosures for Investors (Rule).
Introduced in March 2024, the Rule mandated that a public company disclose climate-related risks that have, or are likely to have, a material impact on its business strategy, results of operations or financial condition. The Rule was controversial and faced legal challenge soon after its introduction, with key arguments being that the Rule went beyond the SEC’s statutory authority and that the costs of compliance outweighed the benefit to investors. The SEC put a hold on the enforcement of the Rule until litigation was concluded.
Now, the SEC is requesting that the court does not schedule the case for argument while it deliberates internally what the appropriate next steps are. In his statement, the Acting Chairman (who originally voted against the Rule) maintained his opposition and agreed with arguments against the Rule, saying that it is “deeply flawed". This is part of a wider theme of the U.S. Government rolling back or overturning various ESG-related initiatives and principles under the Trump administration.
EU Omnibus proposal to simplify sustainability disclosure and due diligence requirements
On 26 February 2025, the European Commission announced the publication of first drafts of the proposed Omnibus package to amend the sustainability reporting and due diligence requirements under the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D) and the EU Taxonomy framework.
The CSRD and CS3D have some extraterritorial impact, meaning that some Australian businesses are caught by their requirements, depending on their turnover in the European Union. Australian headquartered groups may also have large European subsidiaries that are independently caught by the regimes. However, proposed changes to the application thresholds under the CSRD may mean that some of those companies may longer be in scope if the proposals pass. A further snapshot of some key proposed changes to the CSRD and CS3D is below.
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CSRD Changes |
CS3D Changes |
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The proposals will now be submitted to the European Parliament and the Council for consideration and adoption. The EU Commission has requested its co-legislators to fast-track the proposal to delay the application of the CSRD and CS3D for certain companies, while all other proposals will follow the normal legislative process.
To read more, please see our briefing.
Cancelled: Fifth Edition Corporate Governance Principles and Recommendations
On 20 February 2025, the ASX Corporate Governance Council scrapped the draft Fifth Edition Corporate Governance Principles and Recommendations (CGPR), announcing the current Fourth Edition will remain in effect without change. Eight of the 19 ASX Corporate Governance Council members (including the ASX itself) voted not to proceed with the draft Fifth Edition CGPR.
The draft Fifth Edition CGPR was released on 27 February 2024, and had sought to add provisions focusing on areas such as a company’s relationship with stakeholders, board capabilities and board diversity amongst other areas. Our February 2024 note provided information on the proposed changes.
Greenwashing continues to be a key focus for regulators
Greenwashing remains an enforcement priority for key Australian regulators for 2025-6, including the ACCC and ASIC, along with peak national bodies like the Australian Association of National Advertisers (AANA). Following from last month’s $8.25 million penalty in ACCC v Clorox greenwashing proceedings (refer to our February edition here), we explore further updates below.
Federal Court imposes a $10.5 million penalty against Active Super for greenwashing
On 18 March 2025 the Federal Court imposed a penalty of $10.5 million against Active Super for greenwashing misconduct. In June 2024, the Federal Court found that Active Super contravened the law when it invested in securities that it claimed had been eliminated by its ESG screens.
Active Super’s claims included that it eliminated investments from its superannuation fund that posed “too great a risk” to the environment and community (including tobacco, oil and gambling-related investments), as well as claims that Russian securities were ‘out’.
The Court found that Active Super held direct and indirect investments in gambling, Russian entities, oil and coal companies. ASIC had also alleged at trial that Active Super had falsely misrepresented that it had no investments in tobacco companies, whereas it had investments in companies that supplied packaging to the tobacco industry. Active Super succeeded in showing that this representation was true, on the basis that the ordinary reasonable consumer would understand that these were packaging companies, and not tobacco companies.
This is the third penalty handed down following an ASIC greenwashing action. The Court observed the following in determining the appropriate penalty:
- Greenwashing is not to be regarded as inherently “more serious” than other forms of misconduct.
- Although deterrence is the primary objective for fixing a pecuniary penalty, the Court must also consider broader losses, including the lost opportunity for investors to make an accurate investment choice with correct information.
- Active Super benefitted from misrepresenting its investments as “ethical”; in turn, this was likely to lead to investors “losing confidence” in ESG investments generally.
- The need for specific deterrence was reduced as Active Super has since merged with Vision Super, meaning the Trustee will no longer act as a superannuation fund trustee.
Ad Standards greenwashing complaint upheld: “clean gas”
On 5 February 2025, Ad Standards upheld a complaint against a resources company in relation to an advertisement in a national newspaper. The complaint alleged the ad’s use of the phrase “clean gas” in the context of promoting the company for recruitment purposes was misleading and unsubstantiated.
Ad Standards accepted the complaint by majority, finding that – in the context in question –members of the community would understand “clean” in combination with an energy source to mean the energy source does not produce emissions or have a negative impact on the environment. Ad Standards referred to its practice note, which states 'the use of broad or unqualified general claims of environmental benefit should be avoided unless supported by a high level of substantiation or associated with a legitimate connection to an authoritative source’. Further context or disclaimers explaining the limitations of the word “clean” in this context were necessary.
A minority of the Ad Standards Panel held, to the contrary, that the general community expectation of “clean” included a fuel that was relatively cleaner than other fuels, and that the average reader would understand that gas produces carbon emissions, and so would not be misled.
New AANA Environmental Claims Code comes into force targeting greenwashing
In response to a marked increase in complaints to Ad Standards about advertising involving environmental claims, the AANA adopted an updated Environmental Claims Code. The Code is one of the advertising codes of conduct developed by the AANA as part of AANA’s advertising self-regulation system.
The Code became effective on 1 March 2025. It aims to complement and reinforce the ACCC’s Guidance on Environmental Claims and ensure such claims are “truthful, clear and verifiable”. To read more, see our note.
Senate Inquiry into greenwashing granted extension, again
The Federal Senate inquiry into greenwashing was initially referred to the Standing Committee on Environment and Communications on 29 March 2023. The inquiry focused on greenwashing, the impact of greenwashing on consumers, regulatory examples, advertising standards, and legislative options to protect consumers.
Submissions closed nearly two years ago, but the Committee has now been granted a fifth extension for its report, now due on 28 March 2025. Watch this space.
Private member whistleblower protection bills introduced to Parliament
On 10 and 11 February 2025, two private member bills were introduced to the Federal House of Representatives and the Senate, in a renewed effort to establish an independent Whistleblower Protection Authority: Whistleblower Protection Authority Bill 2025 and Whistleblower Protection Authority Bill 2025 (No 2). There is very little substantive difference between the two bills.
Given these bills do not yet have support from either of the two major parties, they face a challenging pathway to passing Parliament. However, if enacted, the Whistleblower Protection Authority would be empowered to:
- support potential whistleblowers to make disclosures;
- receive whistleblower disclosures;
- investigate and conduct public inquiries into, among other things, the mistreatment of whistleblowers;
- provide or arrange legal advice, representation or other support to persons who make disclosures and become a party to court proceedings;
- undertake enforcement action, including commencing proceedings in a court; and
- undertake educational activities and conduct research and policy work on the efficacy of Australia’s whistleblower protection laws.
While the bills are designed to have jurisdiction over both private and public sector whistleblower matters, the second reading speeches (and the drafting of the bills themselves) indicate a particular focus on strengthening protections for public sector whistleblowers.
Two key decisions from the courts regarding the substantive operation of existing whistleblower protections under the Corporations Act have recently been handed down, and may influence changes to the current legislation (particularly as part of the upcoming mandated five-year review of the relevant Part 9.4AAA of the Corporations Act).
Future Made in Australia: Critical minerals & hydrogen production tax incentives now law
On 14 February 2024, the Future Made in Australia (Production Tax Credits and Other Measures) Act 2024 received assent. The Act introduces the Critical Minerals Production Tax Incentives (CMPTI) and Hydrogen Production Tax Incentive (HPTI).
These incentives aim to stimulate investment, support growth in the critical minerals and hydrogen sectors, and facilitate Australia’s transition to a net-zero economy. In order to capitalise on these incentives, businesses will likely have to act swifty if they are to meet the rapid technological change in the short duration of time of the incentive period.
Federal Government appoints fugitive methane emissions expert panel
On 21 February, the Federal Government announced it has appointed an expert panel on fugitive methane emissions (the Panel) and made its terms of reference public. The Panel's task is to evaluate fresh methodologies for quantifying fugitive emissions and their potential utilisation in the National Greenhouse and Energy Reporting (NGER) scheme and Australia’s National Greenhouse Accounts (NGA).
The Panel's creation is part of the Government’s response to the Climate Change Authority’s 2023 and 2020 reviews of the NGER scheme, in which the Authority recommended enhancements to fugitive methane emissions measurement, reporting and verification.
The Panel will concentrate on fugitive methane emissions from coal, oil, and gas sector activities, while emissions from agriculture and waste sectors are not included.
The Panel will advise on the role top-down approaches could play in the NGER scheme and the NGA. The Panel will also suggest ways to enhance scientific knowledge, technology, and Australian capabilities for optimising the use of top-down approaches in the future within the NGER scheme and the NGA. The Panel will operate until June 2027.
ASFI releases the Australian Sustainable Finance Action Plan 2025 – 2027
In March 2025, the Australian Sustainable Finance Institute (ASFI) released the Australian Sustainable Finance Action Plan 2025-2027 (the Plan). The Plan builds on ASFI’s Australian Sustainable Finance Roadmap released in 2020, which outlined 37 recommendations for reshaping Australia's financial system to support sustainable development (the Roadmap).
The Plan, incorporating feedback from a range of stakeholders across the sector, provides an overview of the progress made since the release of the Roadmap, highlighting areas of strong progress, such as the establishment of a mandatory climate-related disclosure regime and the issuance of Australia's first sovereign green bond. It also identifies areas needing further attention, such as the valuation and integration of social and environmental externalities within financial processes and decision-making.
The Action Plan outlines several priority action areas for 2025-2027, including:
AFSI intends that the action areas be delivered by financial system participants collectively in order to deliver the ambitions of the Roadmap.
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
To read more of our ESG thought leadership, please see:
- Latest recordings of Third Wheel Podcast Series: ESG in Australia
- ESG Notes and Climate Change Notes,
- ESG, Sustainability and Responsible Business offering
- Unlocking ESG Investment in Australia
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Written with assistance of James Moloney (Environment, Planning & Communities), Elise Plunket (Head Office Advisory Team), Jacob Lerner (Disputes), Rae Huang and Courtney Van Vorsselen (Employment, Industrial Relations and Safety), Rosalind Wei and Stewart Stevenson (Project Finance). |
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Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.