Who Needs to Report Under Australia's Mandatory Climate Reporting Requirements?
Executive Summary
Australia has entered a new era of corporate sustainability reporting. For many organisations, the introduction of mandatory climate-related financial disclosures has created one simple question: does my business actually need to report? The answer depends on your size, reporting obligations and whether you fall within Australia's phased implementation of mandatory climate reporting. Even if your organisation is not legally required to report today, there is a good chance you will still be affected, as customers, lenders, insurers, investors and supply chain partners increasingly request climate-related information from businesses of every size.
What are Australia's mandatory climate reporting requirements?
Australia has adopted mandatory climate-related financial reporting aligned with the International Sustainability Standards Board (ISSB) framework.
The reporting requirements are built around AASB S2 Climate-related Disclosures, which requires organisations to disclose information about climate-related risks, climate-related opportunities, governance, strategy, risk management, and metrics and targets.
The objective is not simply to report carbon emissions. Rather, organisations are expected to explain how climate change may affect their business, financial performance and long-term resilience.
Who has to report?
The legislation is being introduced in three phases. An organisation generally falls into a reporting group if it meets at least two of the relevant size thresholds.
Group 1 – Australia's largest organisations
Reporting begins for financial years commencing on or after 1 January 2025.
The criteria are revenue of $500 million or more, gross assets of $1 billion or more, and 500 or more employees.
This group also includes certain organisations already reporting under the National Greenhouse and Energy Reporting (NGER) legislation.
Group 2 – Large organisations
Reporting begins for financial years commencing on or after 1 July 2026.
The criteria are revenue of $200 million or more, gross assets of $500 million or more, and 250 or more employees.
Again, organisations generally need to satisfy at least two of the three criteria.
Group 3 – Medium-sized organisations
Reporting begins for financial years commencing on or after 1 July 2027.
The criteria are revenue of $50 million or more, gross assets of $25 million or more, and 100 or more employees.
This phase significantly expands the number of organisations required to report.
Does this only affect listed companies?
No. One of the biggest misconceptions is that mandatory sustainability reporting only applies to ASX-listed organisations.
In reality, many large proprietary companies, financial institutions and other reporting entities captured by the Corporations Act are also required to comply if they meet the relevant thresholds.
My business isn't required to report. Can I ignore this?
Probably not. Although many SMEs are outside the scope of mandatory reporting today, they are increasingly being asked to provide sustainability information by banks, insurers, investors, government procurement teams, large customers and multinational supply chains.
Large organisations cannot understand their own climate risk without understanding the businesses they lend to, insure or buy from. As a result, sustainability reporting is rapidly becoming a commercial requirement even where it is not yet a legal one.
What information needs to be disclosed?
AASB S2 requires organisations to disclose information across four key pillars.
Governance: how the Board and senior management oversee climate-related risks and opportunities.
Strategy: how climate change could impact the organisation's business model, operations and financial position.
Risk Management: how climate-related risks are identified, assessed and managed.
Metrics and Targets: including greenhouse gas emissions and the metrics used to measure progress towards climate-related objectives.
Climate reporting is about more than emissions
Many organisations initially assume compliance is simply about calculating carbon emissions. In reality, climate reporting extends much further.
Businesses must also understand physical climate risks, transition risks, supply chain exposure, sector vulnerability, and resilience under future climate scenarios.
For many organisations, gathering this information is considerably more challenging than calculating emissions alone.
Why data quality matters
The quality of any sustainability report depends on the quality of the underlying data. Incomplete or inaccurate information can lead to poor decision making, inconsistent reporting, increased audit costs, regulatory scrutiny, and reduced confidence from investors and lenders.
As reporting requirements mature and assurance requirements increase, robust data governance will become increasingly important.
How NCED helps
The National Catastrophe & ESG Dataset (NCED) has been developed to help Australian organisations understand climate-related risk across the private company market.
NCED combines multiple datasets into a single intelligence platform, including estimated greenhouse gas emissions, physical climate risk, transition risk, industry classification, company demographics, governance indicators, modern slavery indicators and business characteristics.
Rather than requiring organisations to source information from multiple providers, NCED brings together the data needed to support climate risk assessment and sustainability reporting. Whether organisations are preparing for mandatory reporting, responding to customer questionnaires or assessing lending and supply chain exposure, NCED provides a consistent, scalable foundation for climate-related decision making.
Frequently Asked Questions
Do I need to report if I'm a small business?
Not necessarily. However, many small businesses are already being asked for sustainability information by larger organisations that are subject to mandatory reporting.
How do I know which reporting group I fall into?
Generally, organisations must satisfy at least two of the three size thresholds relating to revenue, assets and employee numbers.
Does AASB S2 replace voluntary ESG reporting?
No. Many organisations will continue to publish broader sustainability reports alongside their mandatory climate disclosures.
When should businesses start preparing?
Immediately. Even organisations not due to report until 2027 often require significant time to establish governance processes, collect reliable data and develop reporting capability. ASIC has encouraged entities in later reporting groups to begin preparing well before their commencement dates.
Closing Insight
Mandatory climate reporting represents one of the most significant changes to Australian corporate reporting in decades. While the legislation is being introduced in stages, its impact extends well beyond the organisations legally required to report today. Businesses that begin preparing early will not only reduce future compliance costs but also strengthen their ability to access finance, win contracts and demonstrate resilience in a rapidly evolving economy.