Australian Sustainability Reporting Legislation and Australian Sustainability Reporting Standards
Australia has recently introduced mandatory sustainability reporting for large businesses and financial institutions. The compulsory climate reporting framework was legislated in September 2024. It is hoped that this mandatory reporting will not only provide greater transparency and accountability regarding an entity’s climate related plans, but will also encourage those entities to examine their strategic opportunities for the future.
Overview of Australia’s Mandatory Climate Reporting Legislation
In September 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 was passed, introducing mandatory climate-related financial disclosures for certain corporations and other entities through amendments to the Corporations Act 2001.
in 2025 ASIC produced the Regulatory Guide 280 Sustainability Reporting Outlining the preparation of the sustainability report; specific issues about the contents of the sustainability report; sustainability-related financial disclosures outside the sustainability report; and ASIC’s administration of the sustainability reporting requirements.[1]
According to ASIC, under Chapter 2M of the Corporations Act 2001, entities must prepare a sustainability report:
if they are required to prepare an annual financial report under Chapter 2M; and
meet one of the sustainability reporting thresholds under s292A.
Entities that meet the sustainability reporting thresholds under s292A include:
entities meeting at least two of three size criteria (based on revenue, assets and employees)
National Greenhouse and Energy Reporting (NGER) reporters and
asset owners with value of assets above specified thresholds.[2]
Full details of the legislation can be found on ASIC’s website.
What are the Australian Accounting Standards Board issued AASB S1 AASB S2?
The Australian Accounting Standards Board (AASB) issued AASB S2 to support the Australian Government’s decision to require certain large businesses and financial institutions to prepare climate-related financial disclosures.[1]
The AASB has provided the following information regarding the Australian Sustainability Reporting Standards (ASRS).[2]
The Australian Sustainability Reporting Standards (ASRS) consist of two Standards[3]:
AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information
AASB S2 Climate-related Disclosures—based on IFRS S2 Climate-related Disclosures.
It is important to note that the AASB S1 is a voluntary Standard. Entities can choose to apply AASB S1 but are not required to do so. The AASB S2 is a mandatory Standard for certain entities to apply in accordance with requirements that are set out in the Corporations Act 2001.
The mandatory AASB S2 requires entities to disclose information about climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance, or cost of capital over the short, medium or long term. The main climate-related financial disclosure requirements relate to governance, strategy, risk management, and metrics and targets, including information about scenario analysis and Scope 1, Scope 2 and Scope 3 greenhouse gas emissions.[4]
Which entity is mandated to report?
AASB S2 is mandatory for certain entities for annual reporting periods beginning on or after 1 January 2025. The timing of the first reporting period for which an entity must apply AASB S2 is phased into groups:
Group 1 entities: First annual reporting period beginning on or after 1 January 2025
Group 2 entities: First annual reporting period beginning on or after 1 July 2026
Group 3 entities: First annual reporting period beginning on or after 1 July 2027.
In other words, reporting to ASIC is being phased in across different entities based on size, emissions reporting thresholds, and asset ownership, with larger entities reporting first and others following through to 2027. The sustainability report must be lodged with ASIC, included in the annual reports alongside financial and directors’ reports, and subjected to audit/assurance over time.
For example, the largest entities i.e. companies with more than 500 employees, more than $500 m revenue, and greater than$1 b assets are required to begin reporting for yearly periods commencing on or after 1/1/2025 with reports due 30/6/2026.
Mid-sized entities such as those with more than 250 employees, more than $200 m revenue, and more than $500 m assets need to commence their reporting on or after 1/7/2026.
Other large, yet smaller entities for example more than 100 employees, more than $50 m revenue, and more than $25 m assets, will begin reporting for annual periods commencing on or after 1/7/2027.
To summarise, larger entities commence reporting first with smaller entities following over a 3-year rollout period.[1]
ASIC administers the sustainability reporting requirements under the Corporations Act and monitors compliance.
More information about how these changes might affect your company can be found on ASIC’s webpage.
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