Rosanna Iacono, CEO of Strategy and Sustainability Advisory, The Growth Activists, shares her expert insights on how Mandatory Climate Reporting is reshaping not only business strategy, but the entire Australian Fashion industry. Download your free copy of the 2025 Sustainability Report here.
The fashion industry has long had a reckoning with sustainability compliance on the horizon. Now, an unavoidable shift is here – a mandatory climate reporting framework that came into effect on January 1st 2025 will affect fashion organisations of every size in Australia. This is the moment the industry must face one of its biggest negative environmental impacts: greenhouse gas emissions and climate change.
As Joe Longo, the Chair of ASIC, has stated, “(mandatory reporting) is driving the biggest changes to financial reporting and disclosure standards in a generation.” This isn’t just a simple new regulation, it’s a global movement, and Australia’s new legislation – the Australian Sustainability Reporting Standards (ASRS) – activates this shift in our market. The EU has been a leader in this space, and the ASRS is largely aligned with the International Financial Reporting Standards (IFRS) and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This alignment is critical because it ensures Australian businesses are speaking the same language as their global counterparts in the EU, UK, Singapore, Hong Kong, and Japan, as well as specific US states like California. This is driven by a global push for market transparency by investors, who are increasingly demanding reliable data to assess which companies are managing climate risks and are positioned for a resilient, low-carbon future. This global consistency is a good thing; it means a business that prepares for ASRS is already on the path to meeting other international requirements if they trade globally or intend to at some stage.
The ASRS framework establishes reporting obligations for different groups of businesses, with a phased rollout. While the visual timeline details the specific thresholds and dates for Group 1, 2, and 3 entities, it’s crucial to understand who we classify as ‘Group 4’. This is a key point that many in the fashion industry have not yet grasped. ‘Group 4’ comprises every other business, including the smaller enterprises that form the vast supply chains of larger reporting entities. This means even if you’re a small-scale designer brand, manufacturer or fabric supplier who doesn’t meet the formal reporting criteria for Groups 1, 2 or 3, you will still be affected, as your products or services contribute to their Scope 3 emissions.
For fashion, the reliance on complex, global supply chains makes Scope 3 emissions particularly material, often accounting for over 90% of a brand’s total carbon footprint. Australia’s new rules will eventually necessitate data collection from every supplier in the fashion ecosystem, much like the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) holds large companies accountable for their entire value chain.
While this might sound daunting, the real story isn’t about compliance, it’s about competitive advantage and long-term value creation. Mandatory reporting forces us to do the kind of deep analysis of our operations that we should have been doing all along. It’s an opportunity to reframe what can be seen as a cost into a strategic investment. At The Growth Activists, we’ve seen first-hand how companies can turn this regulatory change into a powerful driver of commercial value.
The benefits are far-reaching and touch every part of a business. Financially, comprehensive reporting can lead to significant cost savings. By mapping out emissions hotspots across the entire value chain, businesses identify opportunities to reduce energy consumption, minimise waste, and streamline logistics. This isn’t about just ticking boxes; it’s about making your business leaner and more efficient.
Beyond efficiency, controlling your data and having a decarbonisation plan makes you a more attractive supplier. Your largest customers are now mandated to disclose their Scope 3 emissions and they will increasingly seek partners who can provide accurate and verifiable data. This proactive approach transforms you from a compliance headache into a key strategic partner, future-proofing your business relationship.
There are also powerful qualitative benefits. Robust climate disclosures enhance a company’s reputation, attracting a new generation of climate-conscious consumers and building loyalty with existing ones. For investors, high-quality, transparent reporting builds trust, leading to more favourable lending terms and higher valuations from a growing pool of ESG capital. A demonstrable commitment to climate action is also a powerful tool for attracting and retaining top talent who seek purpose-driven careers. It can also drive innovation, leading to the development of new, sustainable products and services that unlock new revenue streams.
This is a profound shift for the Australian fashion industry. It requires building new internal systems and capability to truly integrate and operationalise climate action into the business. The time to start is now, not when the first reporting deadline looms. If you haven’t started yet, don’t stress, but do get going. Whether you are a large corporation or a small-scale designer, understanding your climate impact is no longer optional. It’s a new thread that will determine resilience and success in the years to come.
Rosanna Iacono is the CEO of strategy and sustainability consultancy The Growth Activists and one of Australia’s leading advisors to the fashion, beauty and lifestyle industries. She is a leading expert on brand strategy, having held global leadership roles at Nike and Levi’s and helped deliver private equity exits for Australian businesses like Sheridan and Jurlique.
