Keeping Up with ESG in Australia – June 2026

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 UN General Assembly resolution ‘welcoming’ the ICJ’s opinion on climate change. 

Key highlights

1. In the Spotlight: UN General Assembly adopts resolution ‘welcoming’ the ICJ's Advisory Opinion on climate change
2. Yindjibarndi Ngurra Aboriginal Corporation awarded $150.1 million in native title compensation
3. ESG enforcement and litigation update
   1. High Court of Australia hears its first ‘climate’ case in relation to coal mine extension
   2. ASIC proceedings resolved: Responsible entity to pay $7.3 million pecuniary penalty
   3. UN Special Rapporteur granted leave to appear in judicial review of gas project extension approval
4. Major banks back sustainable finance reforms to safeguard Australia’s economy
5. Federal Budget: ESG takeaways
   1. Sustainability Reporting: Thresholds Adjustments and Refinements
   2. NEPA: There’s a New Regulator in Town
   3. Green Investment
6. Regulatory updates
   1. ASIC shares early observations on sustainability reporting
   2. ASIC updates guidance on financial reporting and audit relief
   3. ASIC publishes e-learning educational modules on sustainability reporting
7. The majority of Tuvalu has registered for Australia’s climate visa

In the Spotlight: UN General Assembly adopts resolution ‘welcoming’ the ICJ's Advisory Opinion on climate change

On 20 May 2026, the United Nations General Assembly passed a resolution endorsing the recent advisory opinion of the International Court of Justice (ICJ), on the obligations of States under international law in respect of climate change (UN Resolution). The UN Resolution, brought by the Republic of Vanuatu, received 141 votes in favour and 8 votes against, with 28 countries abstaining. 

In addition to ‘welcoming’ the ICJ advisory opinion, the UN Resolution calls all States to comply with their obligations under international law to ensure the protection of the climate system and the environment from GHG emissions. It urges that States, in line with their obligations under the Paris Agreement and in the context of their different national circumstances, pathways and approaches, implement measures to achieve the collective goal of limiting the increase in global average temperature to 1.5 degrees Celsius above pre-industrial levels. These measures include tripling renewable energy capacity, transitioning away from fossil fuels in a just and equitable manner, and phasing out fossil fuel subsidies. 

The resolution requests the Secretary-General submit a report to the General Assembly containing ‘ways to advance compliance’ with the relevant international law obligations, taking into account ‘the best available science’. A follow-up to the advisory opinion will be included in the provisional agenda of the subsequent General Assembly session, scheduled for September 2028. 

For details about the ICJ Advisory Opinion, see our August 2025 ESG Blog post.

Relevance of ICJ Opinion to corporate Australia 

The implications of the ICJ advisory opinion for directors’ duties in Australia was also considered by Ruth Higgins SC, Zoe Bush, and Jennifer Robinson in their recent ICJ Directors Duties Joint Opinion (Joint Opinion). The Joint Opinion states that following the ICJ Advisory Opinion (and a number of other independent developments) the standard of care may be raised for directors in relation to climate-related risks, particularly for directors of companies subject to Australia’s mandatory climate reporting regime. Despite the ICJ Advisory Opinion being non-binding on States, the Joint Opinion notes how it has already influenced domestic regulatory and policy developments, including the announcement by the Government of NSW that it will no longer consider applications for new ‘greenfield’ coal mines. In addition, the ICJ Advisory Opinion has been referred to in several cases challenging fossil fuel project approvals.

The Joint Opinion highlights that as the magnitude and probability of climate-related risks increases, so too may the standard of care expected of directors, particularly those in high-emitting sectors. The Joint Opinion also suggests that the ICJ’s advisory opinion will likely be relied on by claimants seeking to litigate climate-related harms in Australia.

While the conclusions in the Joint Opinion are not ‘new’ law and emphasise existing principles for proactive supervision of material business risks, they do provide a timely reminder of relevant areas of transition risk that companies may wish to consider as they prepare for their first year of mandatory climate reporting.

Yindjibarndi Ngurra Aboriginal Corporation awarded $150.1 million in native title compensation 

On 12 May 2026, the Federal Court made a native title compensation award to the Yindjibarndi Ngurra Aboriginal Corporation (YNAC) of $150.1 million, the highest to date in Australian history.

Background

YNAC filed a native title claim in 2003. In 2017, the Court determined that YNAC held exclusive rights over sections of the Determination Area and non-exclusive rights over the balance of the land. In 2012, while the native title claim application was being decided, Fortescue and YNAC were negotiating an agreement for the use of Determination Area land for the proposed Solomon Hub. However, negotiations between the parties failed to reach agreement. The Western Australian Government subsequently granted mining tenements in the Determination Area to Fortescue. YNAC subsequently brought a claim for compensation for loss, diminution and impairment of native title rights and interests against the Western Australian Government (who in granting the tenements, did the relevant “future acts”) and Fortescue.

Calculating loss and the relevance of revenue

Since operations commenced, Fortescue’s Solomon Hub has generated an estimated $80 billion in revenue. However, the Federal Court confirmed in its decision that economic loss is determined with reference to the freehold value of the land, not the profit generated by activities on the land. The YNAC decision also noted that the assessment of cultural loss will be made with reference to damage to areas of cultural heritage, the effect of mining tenements, and the scale of operations (including the kilometre span of the land, and associated infrastructure). The total award was comprised of $150 million awarded for cultural loss and $100,000 for economic loss, significantly lower than the $1.8 billion in compensation sought by YNAC. The decision reinforces the principle that cultural loss is the predominant factor in determining the quantum of compensation. 

The future of cultural loss compensation orders

Two of the three all-time decisions on the quantum of native title compensation have been handed down in 2026. The YNAC decision follows the Federal Court's landmark Gudanji, Yanyuwa and Yanyuwa-Marra (GYYM) decision, handed down in February this year. At the time, the $54 million compensation order in the GYYM decision was the highest native title award. The YNAC and GYYM decisions could indicate the Court’s willingness to award higher compensation orders for future cultural loss compensation claims.

Please see our Environment, Planning and Communities Note on the implications of the Yindjibarndi decision for WA mining for further detail. 

ESG enforcement and litigation update

High Court of Australia hears its first ‘climate’ case in relation to coal mine extension

On 13 May 2026, the High Court of Australia heard oral submissions in MACH Energy Australia Pty Ltd v Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc, the first ‘climate’ case to be heard in the High Court. 

The case concerns an application by MACH Energy to extend the operating life of the Mount Pleasant Coal Mine. The Independent Planning Commission (IPC) approved the application subject to conditions, noting the cumulative impact of greenhouse gas emissions globally and referring to Australia’s obligations under the Paris Agreement. On appeal, the Land and Environment Court upheld the IPC’s decision. However, the Court of Appeal quashed that decision, on the basis that the IPC had failed to consider the specific effects of climate change on the locality of the mine. 

On 17 December 2025, MACH Energy appealed that decision to the High Court, on the basis that the Court of Appeal erred in:

1. construing the Environmental Planning and Assessment Act 1979 (NSW) (the Act) as imposing a requirement to consider environmental impacts of a development on the built and natural environment ‘in the locality’;
2. concluding that the requirement to consider the likely impacts of a development, including environmental impacts on both the natural and built environments, imposed a specific requirement to conduct a causal enquiry as to the impacts of climate change; and
3. concluding that the impact of climate change is capable of being an environmental impact in the locality of the development.

The proceedings have attracted interest from the scientific and academic communities, with the Union of Concerned Scientists, the Centre for Climate Engagement, the Sabin Centre for Climate Change Law and Melbourne Climate Futures granted leave to appear as amici curiae. Their submissions focused on climate law and climate attribution science, in support of the contention that a causal link between a development's greenhouse gas emissions and local climate impacts can be established, and that the proper construction of the Act requires such impacts to be considered.

Please see our Mining Note on the NSW Court of Appeal decision for more detail about that decision.

ASIC proceedings resolved: Responsible entity to pay $7.3 million pecuniary penalty

ASIC has resolved proceedings brought against a responsible entity in relation to one of its funds which was marketed as being socially conscious (the Fund). The responsible entity agreed to:

• pay a $7.3 million pecuniary penalty; 
• reimburse ASIC’s legal costs up to $650,000; and
• consent to declarations that it engaged in misleading conduct and breached its duties under the ASIC Act and Corporations Act. 

The parties will agree a statement of agreed facts and admissions prior to the finalisation of the proceedings.

For further detail on the proceedings, see our December 2025 edition.

UN Special Rapporteur granted leave to appear in judicial review of gas project extension approval

On 25 May 2026, the UN Special Rapporteur on the Human Right to a Clean, Healthy and Sustainable Environment (UN Special Rapporteur) was granted leave to appear as amicus curiae in judicial review proceedings regarding the Federal Environment Minister’s decision to approve a gas field project extension. The UN Special Rapporteur’s leave to appear is limited to written submissions, which were filed with the Court on 2 June 2026. Counsel for the UN Special Rapporteur previously indicated that she would provide submissions with respect to Australia's international legal obligations and the relevance of these obligations to the statutory construction of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). The proceedings are listed for hearing from 21 to 27 July.

For further detail on the proceedings, see our December 2025 edition.

Major banks back sustainable finance reforms to safeguard Australia’s economy

Australia’s major banks are showing increasing support for expanding Australia’s Sustainable Finance Taxonomy beyond green bonds to unlock global investment in Australian sustainable projects. 

As part of its recent report, Unlocking Private Capital for the Transition, the Australian Sustainable Finance Institute (ASFI) found that there is strong market appetite among Australia’s major banks for expanding the taxonomy’s criteria to safeguard Australia’s economy from escalating climate risks. Notably, 80% of the banks surveyed favoured:

• the expansion of the taxonomy to climate adaptation and resilience; and
• a shared public-private governance model to ensure that the taxonomy is useable and credible.

The report also emphasised that the taxonomy’s success as a capital mobilisation tool will rely on widespread market adoption, beyond its use as a green bond framework. Although Australia’s green bond market has experienced growth in recent years, green bonds still represent just five per cent of all bonds issued. Given these findings, ASFI has recommended that the Government:

• expand the taxonomy to encompass adaptation and resilience as an immediate priority;
• deepen engagement to shape emerging international standards in Australia’s interests, particularly for key sectors such as mining and agriculture; and 
• establish enduring taxonomy governance arrangements that enable ongoing public-private cooperation for taxonomy implementation, expansion, and international engagement. 

Federal Budget: ESG takeaways

The 2026-2027 Australian Federal Budget has introduced a number of significant ESG-related changes with key takeaways in sustainability reporting thresholds and refinements, new regulators and green investment gaps.

Sustainability Reporting: Thresholds Adjustments and Refinements

The Government has confirmed that it will pursue legislative amendments to effectively double the monetary thresholds for determining whether a proprietary company is classified as 'large’ for the purposes of the climate-related disclosures regime.

These planned increases raise the consolidated revenue threshold from $50 million to $100 million, and the gross assets threshold from $25 million to $50 million. The threshold adjustment reduces the disclosure burden borne by smaller entities that will no longer be required to lodge: 

1. an annual audited financial report; 
2. a directors’ report; or 
3. a sustainability report. 

The Budget also allocates $4.8 million over 4 years to External Reporting Australia, which will replace the AASB, AUASB and the Financial Reporting Council. Once the new entity has been established, its core task will be to support climate sustainability reporting by operating as a ‘one-stop-shop’ for auditing and climate standards.

Targeted refinements to the climate reporting framework are underway with Treasury having committed to consult on three key points, including: 

1. clarifying the 'undue cost or effort' standard;
2. adjusting assurance settings; and 
3. setting clearer boundaries on supplier information requests.

NEPA: There’s a New Regulator in Town

The Budget allocates more than $500 million over four years to support establishment of the National Environmental Protection Agency (NEPA) as an independent regulator from 1 July 2026, under the 2025 reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

NEPA’s objectives will include overseeing compliance with and enforcement of the EPBC Act and National Environmental Standards, an expectation of streamlining delegated environmental assessments and approvals under the EPBC Act, and supporting modernisation of data and digital systems including use of artificial intelligence. Please see our Environment, Planning and Communities Note on the finalised EPBC reforms for further detail.

Green Investment

The primary win for green investment is a time-limited 50% CGT discount for foreign investors in Australian renewable energy assets, running until 30 June 2030. The EV fringe benefits tax exemption also continues in phased form, with full relief until April 2029 for vehicles under $75,000, before transitioning to a permanent 25% discount. 

However, the Budget also relocates funding from several clean energy programmes, with Hydrogen Headstart funding halved from $2 billion to $1 billion, and $2.2 billion in savings being redirected from Solar Sunshot, Battery Breakthrough and Powering the Regions. The Fuel Tax Credit scheme, which has an estimated cost of $47 billion over the forward estimates, has been retained.

Regulatory updates

ASIC shares early observations on sustainability reporting

ASIC has released its early observations in regard to Group 1 entity sustainability reports for financial years commencing on or after 1 January 2025. Of the 259 sustainability reports lodged for the financial year ending 31 December 2025, mining-related entities were the top reporting sector. While ASIC noted an improvement in the quantity and quality of climate-related financial information compared to voluntary disclosures, it identified areas for improvement, including that: 

• Disclaimers that conflict with the statutory framework and objectives of sustainability reporting are not permitted; 
• "Reasonable and supportable" information to identify climate-related risks includes information about "past events, current conditions and forecast future events";
• Disclosures of judgements and measurement uncertainty must be clear and proximate; and
• The disclosure of additional climate-related information must not obscure material climate-related financial information.

ASIC has confirmed it will publish its final observations from this review in the second half of 2026. In the meantime, entities that have already lodged reports should review these early observations carefully and assess whether their disclosures are consistent with ASIC's expectations. For entities now preparing for their first sustainability report, these observations offer a valuable early indication of the standard to which ASIC will hold reporting companies, and should be incorporated into the preparation processes.

ASIC updates guidance on financial reporting and audit relief

ASIC has reissued Regulatory Guide 43 (RG43), with changes to streamline guidance on financial reporting and audit relief. The updated RG43 does not amend the grounds on which ASIC will grant relief, but does provide extra colour on certain points, including that while ASIC has the discretionary power to grant relief from record keeping requirements, it is very unlikely to grant relief from the requirements to keep financial or sustainability records.

ASIC publishes e-learning educational modules on sustainability reporting

ASIC has recently finalised its series of interactive educational modules on sustainability reporting requirements, developed in partnership with the Australian Accounting Standards Board (AASB). The eight modules provide progressive coverage of the key building blocks of the regime, spanning an introduction to the new sustainability reporting requirements through to the basics of climate change, physical and transition risks, climate-related opportunities, emissions accounting (including Scope 1, 2 and 3 emissions), scenario analysis, and finally governance and risk management integration.

The majority of Tuvalu has registered for Australia’s climate visa

Tuvalu is comprised of nine low-lying islands, its highest point being 4.5 metres above sea level. Tuvalu’s elevation makes it particularly vulnerable to rising sea-levels, which are projected to rise a further 19cm in the next 30 years. Some estimates predict that by 2100, 95% of Tuvalu will be submerged at high tide. 

Australia has established a “climate” mobility pathway for Tuvaluans. 280 Treaty Stream Pacific Engagement visas are set to be granted each year, with registrants given the opportunity to apply via a ballot system.  It is reported that in the inaugural ballot, approximately 80% of the population registered for the opportunity to apply.

The Falepili Union Treaty and Treaty Stream Visa 

Australia and Tuvalu entered into the Australia-Tuvalu Falepili Union Treaty in 2023, as part of Australia’s strategic efforts to strengthen its presence in the Pacific region. Under the treaty, Australia committed to provide climate-change-related support to Tuvalu, including through the establishment of a special visa-pathway. The Treaty Stream allows successful applicants and their families to become permanent residents of Australia, without English language, employment, or location requirements. 

ESG thought leadership

To read more of our ESG thought leadership, please see:

• The Third Wheel Podcast Series: ESG in Australia
• ESG Notes and Climate Change Notes,
• ESG, Sustainability and Responsible Business offering
• Unlocking ESG Investment in Australia

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.