Australia now requires many large and medium-sized companies to report on climate-related risks, opportunities and emissions. These requirements are designed to make it clearer how climate change affects businesses, where risks sit, and where emissions come from across operations and supply chains.
The rules came into effect on the 1st of January 2025 with a staged rollout, depending on company size and structure.
Australia’s mandatory climate reporting sits within the Australian Sustainability Reporting Standards (ASRS), issued by the Australian Accounting Standards Board (AASB). These standards are designed to bring sustainability and climate information into mainstream financial reporting. Climate reporting is covered specifically by AASB S2, while AASB S1 sets broader requirements for sustainability-related information.
In this blog, we break down everything you need to know.
Understanding Australia’s climate reporting requirements
The reporting requirements are being introduced gradually to give businesses time to prepare. They first apply to large companies, including listed entities, large private companies, financial institutions and superannuation funds that meet certain thresholds under the Corporations Act. Companies in scope will be required to disclose:
- Climate-related risks and opportunities: Both physical risks (such as extreme weather events) and transitional risks (related to shifts towards green technologies or regulatory changes) must be disclosed, along with any opportunities for growth in a greener economy.
- Greenhouse gas emissions: Companies must report emissions from their direct operations (Scope 1) and energy use (Scope 2). Indirect emissions from their supply chain (Scope 3) will also be required, with a phased approach starting in 2026.
These requirements are explained in AASB S2, the standard that sets out how climate information should be reported in Australia.
Under this approach, companies are expected to explain four key things:
- Who is responsible for overseeing climate issues
- How climate change affects the business and its strategy
- How climate risks are identified and managed
- How emissions and progress are measured
Medium-sized companies have more time to comply, while smaller companies are brought into the reporting requirements later, where climate risks or opportunities could have a meaningful impact.
What are AASB S1 and AASB S2?
AASB S1 and AASB S2 are the standards companies use to prepare sustainability and climate-related disclosures in Australia.
AASB S1 sets the overall requirements for sustainability-related information. It explains how companies should identify and disclose sustainability risks and opportunities that could affect their financial position or future performance. This provides the foundation for sustainability reporting.
AASB S2 focuses specifically on climate. It sets out how companies should report climate-related risks and opportunities, greenhouse gas emissions, climate targets, and how resilient their strategy is under different climate scenarios.
Companies use AASB S1 and AASB S2 together to structure the sustainability information included within their annual reporting. The standards help ensure climate information is consistent, comparable and connected to financial reporting.
Climate reporting timelines
Climate reporting under AASB S2 must also stand up to external review. Assurance requirements are being introduced gradually, starting with lighter checks and becoming more detailed over time. This means companies need clear records, consistent methods and reliable data to support what they report.
Submitting your mandatory climate-related financial disclosures
Companies in scope must prepare and publish their climate-related financial disclosures as part of annual reporting. This is disclosed via a sustainability report, which forms part of the annual report and is published alongside the financial statements. This means climate information follows the same reporting cycle and approval process as financial information.
What companies need to include in their sustainability report
Under the Corporations Act, the sustainability report is made up of three core elements:
- Climate statements for the reporting year
- Notes that explain how the climate information has been prepared
- A director’s declaration confirming that the statements and notes comply with the relevant reporting requirements
What goes into the Climate statement?
The climate statements contain the main climate-related disclosures and must be prepared in line with AASB S2. This means it should include information on:
- Governance and risk management processes, including how climate issues are overseen and managed
- Climate resilience, supported by scenario analysis
- Any climate transition plans
- Climate-related targets and progress against them
- Material climate-related risks and opportunities
- Key metrics, including Scope 1,2, and 3 greenhouse gas emissions
What this climate reporting means for Australian businesses
For Australian companies, the new climate reporting legislation brings several implications:
- Greater transparency: Businesses will need to provide detailed disclosures about their climate-related risks, impacts, and opportunities. This will improve visibility for investors focused on sustainability, who will use this information for risk assessments and stewardship activities.
- Investment in compliance systems: To meet these new requirements, companies will need to invest in systems to track, manage, and report emissions data. This could involve adopting new technologies or working with consultants to improve data accuracy, especially for Scope 3 emissions.
- Leadership opportunities: Businesses that take proactive steps to reduce their emissions can enhance their appeal to climate-conscious investors, customers, and stakeholders, positioning themselves as leaders in sustainability.
Five practical steps to take now
- Understand what applies to your business: Confirm whether your organisation is in scope and which reporting group you fall into, as this determines timing and level of detail.
- Map the data you already have: Identify what climate and emissions data you already collect, where it sits, and where the gaps are.
- Clarify ownership and governance: Define who owns climate reporting internally, who signs off on disclosures, and how decisions are escalated.
- Build a reliable emissions baseline: Establish consistent Scope 1 and Scope 2 data and begin improving Scope 3 coverage over time.
- Get support if you’re unsure where to start: If you do not have in-house expertise or clear processes yet, getting external support can help you understand what’s required, prioritise the right actions, and avoid unnecessary rework later on.
How Zevero can help
Zevero is a carbon management platform that empowers organisations measure, reduce and report their carbon footprint across Scope 1, 2 and 3. Our platform makes it easier to collect data, improve accuracy and prepare for climate reporting requirements.
With support from climate experts, Zevero helps businesses strengthen reporting processes, identify emissions hotspots and build confidence as reporting and assurance expectations continue to grow.
Want to find out more? Get in touch with a sustainability expert today.
