ESG Regulatory Developments Shaping the Resources Sector in 2026

Australia's ESG regulatory landscape continues to evolve, with climate disclosure obligations, environmental law reform, emissions regulation and social governance developments all reshaping the operating environment for the resources sector.

Following recent legislative and policy developments, several themes are emerging that resources professionals should be monitoring closely.

At a glance

Key changes are now coming into force for climate and sustainability reporting, environmental management, gender equality and production tax incentives. Alongside this, various Bills are before state and federal parliaments to amend environmental protection, environmental offsets and project approvals legislation, and a major review of the Federal Government’s flagship Safeguard Mechanism is due to commence imminently. The table below provides a snapshot of recent and forthcoming changes.

Further details

Climate reporting

One significant ESG development is the continued rollout of Australia's mandatory climate-related financial disclosure regime. From 1 July 2026,  entities in the second reporting cohort, i.e., meet at least two of three thresholds - annual revenue of $200 million or more, gross assets of $500 million or more, and 250 or more employees - will be required to report under AASB S2 Climate-related Disclosures V (View FAQs). The reporting requirements will require climate-related governance, risk management including scenario analysis, emissions data, transition planning, and targets. Mandatory disclosures will also progressively become subject to external assurance requirements, placing greater emphasis on data quality, traceability and governance. For Group 1 reporters, limited assurance expands across additional AASB S2 disclosure areas for financial years commencing on or after 1 July 2026, before reasonable assurance applies starting 1 July 2028.

To support implementation, ASIC has published Regulatory Guide 280, providing practical guidance for boards, audit committees, legal teams and sustainability professionals navigating the new requirements. Furthermore, ASIC has issued early observations on the sustainability reporting of the first AASB S2 reporting group, which can inform first reporters from the second cohort. While mandatory reporting currently focuses on climate-related matters through AASB S2, broader sustainability reporting under AASB S1 remains voluntary. For entities already reporting under NGER, the emissions and energy data can serve as a foundational input to AASB S2 reporting.

Safeguard Mechanism review

The Australian Government's review of the Safeguard Mechanism is expected to take place during the second half of 2026. The review will examine future baseline decline rates for the period 2030–2035, facility coverage, the future role of Australian Carbon Credit Units (ACCUs), Safeguard Mechanism Credits (SMCs) and international units, as well as whether the mechanism is adequately incentivising on-site emissions reduction. It will also consider arrangements for trade-exposed facilities and the findings of the Carbon Leakage Review.

The Clean Energy Regulator (CER) released its 2024–25 Safeguard Mechanism data insights in April 2026, with the data showing that the mechanism continues to work as expected. These results show an early indication of how declining baselines, crediting arrangements and offset use are influencing emissions performance and compliance strategies across covered facilities. For resource companies operating Safeguard facilities, the outcomes of the review may have implications for future carbon cost exposure, investment decisions and decarbonisation pathways.

Environmental law reform

Australia's most significant environmental reform agenda in decades continues to progress through staged implementation. In February 2026, the first tranche of reforms to the Environment Protection and Biodiversity Conservation (EPBC) Act commenced. These changes aim to streamline environmental assessment and approval processes, improve information sharing and strengthen the role of scientific and technical advice in environmental decision-making. The next major milestone will occur on 1 July 2026, when the National Environmental Protection Agency (NEPA) and the statutory head of Environment Information Australia (EIA) commence operations. NEPA will undertake compliance, enforcement, licensing and assessment functions under delegation arrangements, while EIA will support environmental data access, state-of-environment reporting and environmental-economic accounts.

The most significant reforms are anticipated by 1 December 2026. These are expected to include the introduction of National Environmental Standards, new project approval tests, revised assessment pathways, expanded compliance powers and penalties, and a new restoration charge framework. For the resources sector, these reforms may significantly influence project design, approval timelines, biodiversity management, offsets strategies, land clearing considerations and compliance obligations.

Biodiversity and Offsets

Alongside the EPBC reforms, the Government is progressing amendments associated with the Nature Repair Market. Proposed changes would enable certain biodiversity certificates to be used for environmental offsetting purposes, potentially creating new pathways for project proponents to meet offset obligations. However, project proponents will need to assess certificate eligibility, integrity requirements and alignment with approval conditions before relying on this mechanism.

New South Wales is progressively implementing reforms to its Biodiversity Offsets Scheme following amendments to the Biodiversity Conservation Act 2016. The reforms aim to transition the scheme towards net positive biodiversity outcomes, strengthen application of the avoid-minimise-offset hierarchy and improve transparency around offset obligations. Public consultation on the proposed reforms is open until 17 July 2026.

The Queensland government is reviewing its Environmental Offsets Framework for the first time since 2014. Proposed reforms include changes to offset delivery arrangements, the calculation of financial settlement offsets and broader regulatory requirements. Following the consultation process on the proposed reforms until 29 June 2026, the next step is the evaluation of submissions by the government.

Critical minerals and mining

Another notable development is the growing alignment between sustainability objectives and industrial policy. The Future Made in Australia (Production Tax Credits and Other Measures) Act 2025 introduced production tax credits designed to support renewable hydrogen and critical minerals processing. Eligible critical minerals projects will be able to access a 10 per cent refundable tax offset on qualifying processing and refining costs. Incentives will be available from 1 July 2027 through to 30 June 2040, with access for up to 10 years. For eligible resources companies, it may support investment decisions, improve project economics and strengthen downstream processing capability in Australia.

Australia's Guarantee of Origin Scheme has also been operational since late 2025. The scheme provides a framework for tracking and verifying emissions associated with renewable electricity and low-emissions products, reflecting increasing expectations around emissions transparency, product traceability and responsible supply chains. Furthermore, the Critical Minerals Strategic Reserve is expected to become operational in the second half of 2026, further reinforcing the strategic importance of critical minerals to Australia's economic and net zero ambitions.

In Queensland, the State Development and Public Works Organisation (Critical Minerals) and Other Legislation Amendment Bill 2026 was introduced on 2 June 2026 and remains under consultation. The Bill proposes the creation of a new category of State Strategic Projects, aimed at providing streamlined approval pathways and priority treatment for projects considered of the highest strategic importance to the State. While not yet enacted, the proposed reforms signal Queensland's intent to accelerate development of critical minerals projects and associated downstream processing infrastructure.

Victoria is transitioning to a duty-based regulatory framework for mining and quarrying activities, with major reforms due to commence on 1 July 2027. The reforms replace aspects of the existing work-plan-based system with a general duty requiring operators to proactively identify, assess and manage risks to the environment, communities, land and infrastructure.

PFAS regulation

Management of per- and polyfluoroalkyl substances (PFAS) continues to receive regulatory attention. Restrictions on PFOS, PFOA and PFHxS under the Industrial Chemicals Environmental Management Standard (IChEMS) have been in force since July 2025, while a revised PFAS National Environmental Management Plan (PFAS NEMP 3.1) was released in May 2026. The updated guidance incorporates revised drinking water and freshwater and marine guideline values for PFOS. These developments have implications for contaminated land management, groundwater monitoring, tailings and water management practices, and mine closure planning. The update is also relevant for due diligence in acquisitions, divestments and legacy site management.

Social and governance expectations

Reforms to the Modern Slavery Act 2018 remain under consideration. The Australian Anti-Slavery Commissioner has recommended the introduction of mandatory risk-based due diligence requirements and high-risk declarations for products, services and industries. If implemented, these reforms would increase expectations on organisations to identify and manage modern slavery risks across supply chains. Entities may need to strengthen supplier due diligence, procurement controls, grievance mechanisms and evidence-based reporting.

In addition, amendments to workplace gender equality legislation are now beginning to take effect. From 2026, employers with 500 or more employees will be required to select three gender equality targets and work towards achieving them within a three-year cycle, using the Workplace Gender Equality (Gender Equality Targets) Instrument 2025.

In June 2026, the ALRC delivered its final report on the Future Acts Regime under the Native Title Act 1993, containing 86 recommendations. While the Australian Government has not yet adopted any of these into a legislation draft, developments arising from the review will be monitored and described in future updates.

Looking ahead

Collectively, these developments demonstrate that ESG in Australia is becoming increasingly embedded within regulatory frameworks rather than remaining a matter of voluntary corporate practice. Climate disclosure requirements, assurance obligations, emissions regulation, environmental reform and evolving social governance expectations are increasing the importance of robust ESG management systems across the resources sector. At the same time, the convergence of industrial policy and sustainability objectives—particularly in critical minerals and supply chain traceability—suggests that ESG considerations will continue to play a central role in Australia's economic and strategic development agenda. Besides these broader developments, readers are advised to also monitor legislative and regulatory changes in their relevant jurisdictions, which may apply to specific locations, projects, operations or commodities.