Energy data can play an important role in this preparation. Energy Action helps Australian businesses understand and manage their energy consumption, procurement and energy strategy, providing valuable visibility as organisations respond to changing sustainability and commercial requirements. Visit Energy Action to explore how better energy management can support your organisation's broader business and sustainability objectives.
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Mandatory climate reporting Australia requirements are changing how many organisations identify, manage and communicate climate-related financial risks and opportunities.
Australia's climate-related financial reporting rules commenced on 1 January 2025. Rather than requiring every business to report immediately, the legislation introduces obligations progressively according to entity size, emissions reporting status and, for particular financial entities, assets.
For businesses, the central question is straightforward: does our organisation have to report?
The answer requires more than checking revenue alone. Organisations need to consider whether they already have annual financial reporting obligations under Chapter 2M of the Corporations Act 2001 and whether they meet one of the sustainability reporting thresholds in section 292A.
Understanding these thresholds early matters because climate reporting can require significant preparation across finance, sustainability, risk, governance, procurement and energy management.
The starting point for mandatory climate reporting Australia is whether an entity must prepare an annual financial report under Chapter 2M of the Corporations Act.
If it does, it must then determine whether it meets an applicable sustainability reporting threshold. ASIC identifies three main threshold pathways: the corporate size threshold, the emissions threshold applying to relevant NGER-registered corporations and an asset-value threshold for certain registered schemes, registrable superannuation entities and retail corporate collective investment vehicles.
Therefore, the rules extend beyond conventional large operating companies.
For large entities assessed under the corporate size test, the requirements are being introduced through three reporting groups.
| Reporting group | Corporate size criteria | First reporting period |
| Group 1 | Meets at least two: $500 million or more consolidated revenue, $1 billion or more consolidated gross assets, 500 or more employees | Financial years beginning on or after 1 January 2025 |
| Group 2 | Meets at least two: $200 million or more consolidated revenue, $500 million or more consolidated gross assets, 250 or more employees | Financial years beginning on or after 1 July 2026 |
| Group 3 | Meets at least two: $50 million or more consolidated revenue, $25 million or more consolidated gross assets, 100 or more employees | Financial years beginning on or after 1 July 2027 |
ASIC's current guidance confirms these commencement dates and thresholds. Importantly, an entity using the corporate size pathway must meet at least two of the three relevant criteria, rather than only one.
Group 1 was the first cohort brought into the mandatory regime.
For the corporate size test, an entity generally falls into Group 1 when it meets at least two of these three thresholds:
The reporting obligation applies for financial years beginning on or after 1 January 2025. Consequently, many of Australia's largest businesses have already entered their first climate reporting cycle.
Group 1 also captures registered corporations with NGER reporting obligations that are above the relevant NGER publication threshold.
For these organisations, climate reporting is now part of the broader annual corporate reporting environment rather than a voluntary sustainability exercise.
Group 2 is particularly important in 2026 because its obligations apply to financial years beginning on or after 1 July 2026.
Under the corporate size criteria, an entity enters Group 2 if it meets at least two of the following thresholds:
Additionally, other NGER reporters that were not captured in Group 1 enter the regime through Group 2. Registered schemes, registrable superannuation entities and retail CCIVs meeting the applicable $5 billion asset threshold also fall within this reporting cohort.
As a result, many organisations that previously viewed climate reporting as an issue primarily affecting Australia's largest listed corporations now need to assess their own obligations.
Group 3 expands mandatory reporting further.
For financial years beginning on or after 1 July 2027, entities subject to Chapter 2M annual financial reporting requirements may fall into Group 3 if they meet at least two of these criteria:
These thresholds mean the regime will eventually reach well beyond Australia's largest corporations.
However, falling into Group 3 does not necessarily mean every entity will have extensive material climate-related risks or opportunities. ASIC explains that certain third-cohort entities that determine they have no material financial risks or opportunities relating to climate may prepare statements explaining that conclusion and how it was reached, subject to the applicable legislative requirements.
Therefore, businesses should not assume that limited climate exposure automatically removes the reporting obligation.
The National Greenhouse and Energy Reporting framework is another important pathway into mandatory climate reporting.
Group 1 includes registered corporations with NGER reporting obligations that exceed the applicable NGER publication threshold. Other NGER reporters generally enter through Group 2.
This is especially relevant for organisations operating energy-intensive assets or facilities.
Businesses already collecting energy and emissions data for NGER purposes may have a stronger foundation for climate disclosure. Nevertheless, sustainability reporting extends beyond simply reporting historical greenhouse gas emissions.
It requires organisations to consider how climate-related matters affect financial prospects, governance, strategy and risk management.
A sustainability report consists of climate statements, notes to those statements and a directors' declaration. The climate statements must comply with the Corporations Act and AASB S2 Climate-related Disclosures.
Reporting includes information about material climate-related financial risks and opportunities as well as required climate metrics and targets.
| Area | What businesses need to consider |
| Governance | How directors and management oversee climate-related matters |
| Strategy | How climate risks and opportunities affect business strategy and financial prospects |
| Risk management | Processes used to identify, assess and manage climate-related risks |
| Metrics and targets | Measures used to monitor climate performance and objectives |
| Emissions | Relevant Scope 1, Scope 2 and Scope 3 greenhouse gas information under applicable requirements |
ASIC states that required disclosures include information concerning material financial risks or opportunities relating to climate, metrics and targets and information about governance, strategy and risk management.
For many businesses, energy information will therefore become increasingly important to financial and sustainability reporting processes.
Generally, the regime does not directly apply to ordinary small-to-medium businesses that do not meet the reporting requirements.
ASIC specifically notes that the new requirements will not directly apply to small-to-medium-sized businesses. Furthermore, small proprietary companies without Chapter 2M annual financial reporting obligations are not required to prepare sustainability reports under this regime.
However, that does not mean smaller businesses can ignore climate data completely.
Large reporting organisations may need information from suppliers and other businesses in their value chains. ASIC expressly recognises that reporting entities may request information from small businesses and farmers within those value chains.
Consequently, an SME supplying a major corporation could face requests for electricity consumption, fuel use, emissions or other sustainability information even though the SME itself has no direct statutory reporting obligation.
Energy consumption is closely connected to organisational greenhouse gas emissions.
For many businesses, purchased electricity contributes significantly to Scope 2 emissions. Fuel use may contribute to Scope 1 emissions, while suppliers, logistics, purchased products and other value-chain activities can contribute to Scope 3 emissions.
Therefore, businesses preparing for climate reporting need reliable data rather than treating sustainability reporting as a once-a-year compliance exercise.
Energy procurement information, meter data, invoices, renewable electricity arrangements and emissions-related records can all support stronger internal reporting processes.
Furthermore, better energy visibility can help organisations identify financial risks and opportunities. For example, an organisation may identify opportunities to improve efficiency, manage electricity price exposure or evaluate renewable energy procurement alongside its wider climate strategy.
Preparation should begin with determining which reporting group applies and the first financial year for which reporting is required.
Businesses can then assess gaps across governance, data, processes and controls. In particular, organisations should establish clear responsibility for climate reporting, review the quality of emissions and energy information, identify material climate-related financial risks and opportunities and ensure relevant teams understand AASB S2 requirements.
Assurance also needs consideration. ASIC confirms that entities required to prepare sustainability reports must have those reports reviewed or audited to the extent required under the applicable assurance arrangements.
Therefore, reliable data trails and internal controls should be developed before the reporting deadline rather than after the reporting period closes.
The sustainability report forms part of an entity's annual reporting obligations.
ASIC states that reporting entities generally lodge sustainability reports within three months after financial year-end for disclosing entities, registered schemes and registrable superannuation entities and within four months for other reporting entities.
Accordingly, organisations need enough time after year-end for preparation, review, governance approval and applicable assurance.
This makes early data readiness particularly important. Businesses that wait until the annual reporting deadline may find it difficult to reconstruct reliable climate and energy information retrospectively.
Mandatory climate reporting Australia requirements represent a major development in Australian corporate reporting. Group 1 reporting has already commenced, Group 2 applies to financial years beginning on or after 1 July 2026 and Group 3 follows from 1 July 2027.
The first step is determining whether your organisation has Chapter 2M annual financial reporting obligations and meets the relevant corporate size, NGER or asset-value threshold. From there, businesses can build appropriate governance, climate-risk assessment, emissions measurement and reporting processes.
Energy data can play an important role in this preparation. Energy Action helps Australian businesses understand and manage their energy consumption, procurement and energy strategy, providing valuable visibility as organisations respond to changing sustainability and commercial requirements. Visit Energy Action to explore how better energy management can support your organisation's broader business and sustainability objectives.
Entities generally need to report when they are required to prepare an annual financial report under Chapter 2M of the Corporations Act and meet an applicable sustainability reporting threshold. These thresholds cover qualifying large entities, relevant NGER reporters and certain registered schemes, registrable superannuation entities and retail CCIVs. The requirements are being phased in according to the applicable reporting group.
Australia's climate-related financial reporting regime commenced on 1 January 2025, with Group 1 reporting for financial years beginning on or after that date. Group 2 applies to financial years beginning on or after 1 July 2026, while Group 3 starts for financial years beginning on or after 1 July 2027. This phased implementation gives smaller reporting cohorts additional preparation time.
Most small businesses are not directly required to prepare sustainability reports because they do not meet the applicable thresholds or Chapter 2M reporting requirements. However, they may still receive requests for emissions, energy or other information from larger customers that need value-chain information for their reporting. Therefore, maintaining reliable energy and emissions records may still become commercially valuable.
For the corporate size pathway, Group 3 covers entities meeting at least two of three criteria: $50 million or more in consolidated revenue, $25 million or more in consolidated gross assets and 100 or more employees. Group 3 starts for financial years beginning on or after 1 July 2027. Businesses approaching these thresholds should assess their position before the commencement date rather than waiting until reporting is due.
Climate statements address material climate-related financial risks and opportunities and relevant metrics and targets, including greenhouse gas emissions information required by AASB S2. Reporting also covers governance, strategy and risk-management information relating to climate matters. Consequently, organisations need reliable financial, operational, emissions and energy information to support their disclosures.
