Australia's mandatory climate reporting has started. Group 1 applies to financial years starting on or after 1 January 2025. Group 2 applies to financial years starting on or after 1 July 2026.
For a 30 June year-end, Group 2's first reporting year is already under way. Group 3 applies to financial years starting on or after 1 July 2027. Check with your auditor which group, if any, applies to you.
Your first report covers a whole financial year, so the data needs capturing from the start of that year. This article covers who must report in Australia, from when, and what to do now.
The standard builds on frameworks you may already know
Australia's climate standard is AASB S2, part of the Australian Sustainability Reporting Standards. It is based on the ISSB's IFRS S2, which builds on the earlier TCFD recommendations.
If your parent company or a major customer already reports under TCFD or ISSB, the ideas won't be new. Australia is making them a legal requirement.
The standard asks for disclosures under four headings:
Governance. How do the board and management oversee climate risks and opportunities?
Strategy. Which climate risks and opportunities matter to the business? How do they affect the business model and financial plans?
Risk management. How does the business find, assess and manage climate risks? How does this fit with its wider risk management?
Metrics and targets. What are the company's greenhouse gas emissions (Scope 1, 2 and 3)? What targets has it set, and how is it tracking?
Your group depends on three size tests
An entity falls into a group if it meets at least two of three size tests at the end of its financial year. The tests are consolidated revenue, consolidated gross assets and employees. Separate tests also apply to some NGER reporters and asset owners.
| Group | First reporting years start | Revenue | Gross assets | Employees |
|---|---|---|---|---|
| Group 1 | On or after 1 January 2025 | A$500M or more | A$1B or more | 500 or more |
| Group 2 | On or after 1 July 2026 | A$200M or more | A$500M or more | 250 or more |
| Group 3 | On or after 1 July 2027 | A$50M or more | A$25M or more | 100 or more |
Source: ASIC, "Who must prepare a sustainability report". Re-check the current figures there before you rely on them. Check with your auditor.
The reporting date is not the preparation date.
Climate reporting is mostly a data job
The metrics and targets section is mostly about capturing and checking emissions data, across three scopes.
Scope 1 emissions are direct emissions from sources the company owns or controls. Examples are fuel burned in company vehicles, on-site power generation and industrial processes. They are usually the easiest to measure, but still need consistent metering and emission factors you can justify.
Scope 2 emissions are indirect emissions from the electricity, heat or cooling you buy. Record each electricity invoice as it arrives, with the grid emission factor that converts it to emissions. Ask your auditor which Scope 2 figures you must disclose.
Scope 3 emissions are indirect emissions across your value chain, from your suppliers to your customers. Examples include business travel, staff commuting, purchases, and the use and disposal of products you sell. Measuring them in full is hard and often needs your suppliers' help.
There is transitional relief for Scope 3 in the first reporting year. It is temporary, so supplier data work still needs to start early. Check the details with your auditor.
Assurance. An auditor must check parts of your report, and the checks become more thorough over the first few years. Ask your auditor what applies to you, and keep a trail from every figure back to its source.
Avoid three mistakes that put your first report at risk
Mistake one: waiting for certainty before you start capturing data.
Some boards hold off until the rules feel settled, especially while thresholds are under review. But data systems take months to build and test. Waiting can mean missing a credible first year.
Mistake two: treating ESG reporting as a writing job, not a data job.
The hard part isn't the disclosure document; it's the data underneath. Who owns your electricity invoices? Are they in the ERP, or in someone's inbox?
Do fleet records show fuel use by vehicle, or just total spend? Can your expense system export travel by emissions category, or does someone compile it from PDF receipts?
By the time you write the disclosure, that data should sit in one documented place your auditor can check.
Mistake three: leaving Scope 3 for a later year.
Scope 3 can be the largest part of a company's footprint, and the hardest to measure. Collecting supplier emissions data takes relationships, standard templates and time. Starting in the first reporting year leaves little time to gather numbers you can defend.
What to do now: a data plan for Group 3, a credible first year for Group 2
If you're in Group 3 (from 1 July 2027): Work out which emissions categories are material, check your current data against them and list the gaps. The output is a written data plan, with an owner for each system.
If you're in Group 2 (from 1 July 2026): For a 30 June year-end, your first reporting year is already under way. Capture what you can measure credibly this year, ask your auditor how to disclose the gaps, and improve for year two.
For both groups: You'll also need to describe how your board oversees climate risks. If that process doesn't exist yet, build it alongside the data work.
Whatever platform you use, check three things
Whichever ESG reporting platform you choose, check that it:
- Pulls data from the systems you already run, such as your ERP, fleet, utility, expense and travel systems.
- Documents each calculation and emission factor, with a trail from every reported number back to its source.
- Produces output aligned to AASB S2, in the structure the standard requires.
A formatted report is only as reliable as the data and calculations behind it.
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Reenva sells an ESG reporting platform built for Australian climate reporting. It is another company's product, and we show you how it connects to your systems. We don't give assurance or legal advice.