Australia's climate reporting regime requires large companies and other entities that report under Chapter 2M of the Corporations Act to prepare a sustainability report each year. The report contains climate-related financial disclosures prepared under AASB S2 Climate-related Disclosures, which is based on the International Sustainability Standards Board's IFRS S2.
Who Must Report
An entity generally falls into a group if it meets at least two of the three size criteria for that group, or meets one of the other tests shown.
| Group | First reporting period | Size criteria (two of three) | Also included |
|---|---|---|---|
| Group 1 | Financial years beginning on or after 1 January 2025 | Revenue $500m+; gross assets $1bn+; 500+ employees | NGER reporters above the publication threshold |
| Group 2 | Financial years beginning on or after 1 July 2026 | Revenue $200m+; gross assets $500m+; 250+ employees | Other NGER reporters; asset owners with $5bn+ in assets |
| Group 3 | Financial years beginning on or after 1 July 2027 | Revenue $50m+; gross assets $25m+; 100+ employees | Disclosures required only where climate risks or opportunities are material |
Registered charities that report to the ACNC rather than under Chapter 2M are generally outside these requirements.
What the Disclosures Cover
AASB S2 is organised around four areas that will be familiar to anyone who has used the TCFD framework:
- Governance: how the board and management oversee climate-related risks and opportunities.
- Strategy: the risks and opportunities that could affect the business, their financial effects, and the resilience of the strategy under different climate scenarios.
- Risk management: how climate risks are identified, assessed and managed, and how this fits with overall risk management.
- Metrics and targets: greenhouse gas emissions (Scope 1, 2 and, from the second reporting year, Scope 3), industry metrics and any targets set.
Scenario analysis must consider at least two possible futures: one where global warming is limited to 1.5°C, and one where it well exceeds 2°C.
Assurance Is Phased In
The sustainability report is assured by the entity's financial report auditor. Assurance starts with limited assurance over selected disclosures and expands to reasonable assurance over the full climate statements for financial years beginning on or after 1 July 2030. Certain disclosures, including Scope 3 emissions, scenario analysis and transition plans, have modified liability protections for a transitional period.
Why Suppliers Should Pay Attention
Even if you are well below the thresholds, your larger customers will need Scope 3 data, which includes the emissions of the goods and services they buy. Many are already asking suppliers for emissions figures, reduction plans and evidence. Being able to respond quickly and credibly is becoming a commercial advantage.
What to Do Now
- Confirm your position. Check your thresholds and first reporting period, or whether customers will ask you for data.
- Run a gap analysis. Compare current governance, risk processes and data against AASB S2.
- Build your emissions inventory. Start with Scope 1 and 2, then map your most significant Scope 3 categories.
- Do a dry run. Prepare draft disclosures and have them reviewed before your auditor's work begins.
