Key Features & Reporting Requirements – What you Need to Know
Mandatory climate-related financial reporting is now a legal requirement in Australia following the enactment of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
The legislation introduces a new sustainability reporting regime into Chapter 2M of the Corporations Act, requiring certain entities to prepare annual sustainability reports alongside their financial reports. The regime aims to improve transparency around climate-related risks and opportunities and to align Australia’s reporting framework with emerging international sustainability disclosure standards.
What does Climate and Sustainability Reporting mean?
The sustainability report must contain climate-related financial information.
This report is required as part of these entities’ annual reporting obligations, alongside the annual financial report, directors’ report, auditor’s report on the annual financial report and auditor’s report on the sustainability report.
The report should include:
1. Climate Statements
Climate statements disclose the entity’s material climate-related financial risks and opportunities. These disclosures include:
- governance arrangements relating to climate risk;
- the organisation’s strategy for addressing climate-related risks and opportunities;
- risk management processes; and
- metrics and targets, including disclosure of Scope 1, Scope 2 and Scope 3 greenhouse gas emissions.
These disclosures are intended to align with the Australian Sustainability Reporting Standards, which are based on global sustainability disclosure frameworks such as IFRS S2 Climate related Disclosures.
2. Notes to the Climate Statements
The sustainability report must also contain notes to the climate statements, which provide further explanations, assumptions, and disclosures required under the applicable sustainability standards.
3. Directors’ Declaration
Directors must provide a directors’ declaration confirming that, in their opinion, the sustainability report complies with the relevant provisions of the Corporations Act and applicable sustainability standards.
Who is subject to Climate and Sustainability Reporting?
The mandatory reporting regime will be implemented in three (3) phases, based on the size and characteristics of the reporting entity.
1. Group 1 Entities
When do I have to start reporting? 1 January 2025.
What is a Group 1 entity?
Meet at least two of three criteria:
- Consolidated revenue of the entity (and the entities it controls): $500 million or more
- EOFY consolidated gross assets of the entity (and the entities it controls): $1 billion or more
- EOFY employees of the entity (and the entities it controls): 500 or more
2. Group 2 Entities
When do I have to start reporting? 1 July 2026.
What is a Group 2 entity?
Meet at least two of three criteria:
- Consolidated revenue (and the entities it controls): $200 million or more
- EOFY consolidated gross assets of the entity (and the entities it controls): $500 million or more
- EOFY employees of the entity (and the entities it controls): 250 or more
3. Group 3 Entities
When do I have to start reporting? 1 July 2027.
What is a Group 3 entity?
Meet at least two of three criteria:
- Consolidated revenue of the entity (and the entities it controls): $50 million or more
- EOFY consolidated gross assets of the entity (and the entities it controls): $25 million or more
- EOFY employees of the entity (and the entities it controls): 100 or more
Note: Registered schemes, registrable superannuation entities and retail CCIVs will also be considered Group 3 entities if they meet at least two of these criteria (to the extent not already captured under the Group 2 thresholds).
Who is exempt from reporting?
Entities that are exempt entirely from lodging financial reports under Chapter 2M of the Corporations Act are not required to prepare sustainability reports. This includes small and medium-sized businesses and asset owners that fall below all of the size thresholds, and that are not NGER reporters, which will not be subject to the regime.
