Mandatory Climate-Related Financial Disclosures in Australia

Australia is moving towards enhanced transparency in corporate sustainability practices with the recent adoption of the Corporate Sustainability Reporting Directive.
The Australian Government has finally fulfilled its promise to mandate sustainability reporting in Australia.
The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill (Bill) passed through both Houses of Parliament on 9 September 2024 and received Royal Assent on 17 September 2024. The start date for the legislation is 1 January 2025.
This legislation mandates certain organizations to provide climate-related financial disclosures in their annual reports, starting from financial years that begin after January 1, 2025.
The introduction of the CSRD highlights Australiaโs commitment to promoting sustainable practices and holding corporations accountable for their environmental impact, aligning with global efforts to advance corporate sustainability reporting.
The CSRD requires organizations to include detailed climate statements in their sustainability reports, covering areas such as governance, risk management, and emissions. The reporting requirements will roll out in phases, with larger entities starting in 2025 (Group 1), and smaller entities following in 2026 and 2027 (Group 2&3).
Companies must conduct scenario analyses to assess their resilience against climate risks, specifically evaluating the impact of global temperature increases of more than 2ยฐC and a limit of 1.5ยฐC.
Who Reports and When?
Mandatory climate reporting will apply to entities which are already required to prepare annual financial reports under Chapter 2M of the Corporations Act 2001 (Cth) (Corporations Act) and must be made in a Sustainability Report within that annual financial report in accordance with Australian Sustainability Reporting Standards (ASRS).
The obligations for Group 1 reporting entities commence in respect of their financial years commencing after 1 January 2025. The obligations for Group 2 and Group 3 entities will commence for their financial years commencing after 1 July 2026 and 1 July 2027 respectively. The climate reporting regime will apply to not-for-profit entities that meet the same thresholds for Group entities. Charities and certain public authorities are exempt from this regime.
First annual reporting period commences: | Reporting Entities Which Meet Two out of Three of the Following Reporting Criteria | National Greenhouse and Energy Reporting (NGER) Reporters | Asset Owners | ||
---|---|---|---|---|---|
Consolidated revenue for fiscal year | Consolidated gross assets at end of fiscal year | Full-time equivalent (FTE) employees at end of fiscal year1 | |||
Jan 2025 (Group 1) |
AU$500 million or more | AU$1 billion or more | 500 or more | Above the NGERs publication threshold | N/A |
Jan 2026 (Group 2) |
AU$200 million or more | AU$500 million or more | 250 or more | All NGER reporters | AU$5 billion or more of the assets under management |
Jan 2027 (Group 3) |
AU$50 million or more | AU$25 million or more | 100 or more | N/A | N/A |
1 Part time employees are included as an appropriate fraction of a full-time equivalent (FTE) employees.
The Australian Accounting Standards Board (AASB) considered various approaches and settled on aligning Australian standards for sustainability reporting as closely as possible with IFRS S1 and IFRS S2.
These standards are similarly named AASB S1 (a voluntary standard) and AASB S2 (a mandatory standard) and were issued by the AASB on 8 October 2024.
Sustainability Reports will need to be audited in accordance with standards passed by the Auditing and Assurance Standards Board (AUASB).
