Group 2 entities (those meeting at least two of $200M revenue, $500M gross assets, or 250 employees) must report for financial years starting on or after 1 July 2026. Your data collection has effectively already begun. You get one year of Scope 3 relief before it becomes mandatory in year two, and limited assurance applies from year one.
First, confirm you're actually caught
The size tests are the well-known path, but they aren't the only one. Check all three at the consolidated group level, not just the parent entity:
Size thresholds: you meet at least two of: $200M+ revenue, $500M+ gross assets, 250+ employees.
NGER pathway: if your corporate group is a registered NGER reporter, you're Group 2 regardless of size. This catches energy-intensive businesses with modest revenue and headcount. A food processor or a single large gas-consuming site can trip it. If you already lodge under NGER, assume you're in and confirm the detail.
Large asset owners: a registered scheme, super fund or CCIV with $5bn or more in assets is drawn in regardless of the size tests.
If none of these is a clear yes or no, ASIC's Regulatory Guide 280 sets out how to determine your obligation. For how the whole regime fits together — all three groups, the override pathways and the penalties — see Australia's sustainability reporting legislation.
Your reporting timeline
For a standard 30 June year-end, your first sustainability report covers FY2026–27, published with your annual financial report in late 2027. That means the data collection period has effectively already begun. With Group 1 already reporting, you can learn from their experience, and your preparation window is tighter than Group 3's, so it's worth mapping the work early rather than late.
Transition reliefs for Group 2
The Treasury Laws Amendment Act 2024 provides several reliefs:
Scope 3 emissions: deferred for your first reporting year (AASB S2 paragraph C4(b)). From year two, Scope 3 is mandatory.
Scenario analysis: qualitative is permitted in the first year; quantitative can follow.
Comparative information: not required in the first year.
Safe harbour: Scope 3 and forward-looking statements are shielded from private litigation during the transition, provided they're made in good faith. Only ASIC can act on potentially misleading statements during this window.
What you need to disclose
Your report must comply with AASB S2 across all four pillars: Governance (documented board oversight, not just intent), Strategy (risks and opportunities over short/medium/long horizons, scenario analysis, transition plan), Risk management (identify, assess, prioritise, integrate), and Metrics and targets (Scope 1 and 2 from day one; Scope 3 from year two).
If you already report under NGER
You have a real head start: the Scope 1 and 2 activity data and boundary are largely the same. But your NGER numbers don't drop into AASB S2 completely untouched. Two wrinkles are worth knowing before assurance finds them for you:
Global warming potentials. NGER uses AR5 GWP values; AASB S2 points to the latest IPCC assessment (AR6), which nudges methane- and nitrous-oxide-heavy sources slightly higher. An AASB amendment (issued December 2025, effective for reporting periods from 1 January 2027) lets NGER reporters skip recalculating to AR6 for the parts of the business already covered by NGER. Confirm how it applies to your mix rather than assuming a straight copy.
Scope 2 method. AASB S2 requires the location-based figure as a minimum; a market-based figure (reflecting GreenPower or PPAs) is a supplementary disclosure. If you're claiming a market-based reduction, keep the contractual evidence. The assurer will ask for it.
Assurance requirements
From your first year you need limited assurance over governance, your strategy risks and opportunities, and Scope 1 and 2 emissions, broadening to all disclosures over time. "Limited" is a review rather than a full audit, but don't let the word relax you: the assurer still traces individual numbers back to source. The pattern from Group 1 engagements is consistent. The auditor picks a figure and works backwards: "show me the electricity bill behind this Scope 2 number, and walk me through how it became the figure in the report." Engage your provider early; demand is growing fast and the AUASB has published the guidance they'll follow. What they test in practice:
| What the assurer checks | What you need ready |
|---|---|
| Number-to-source traceability | Every figure traced to a source document (the actual bill), the activity data, and the emission factor applied |
| Governance evidence | Board or committee minutes where climate was a real agenda item, not a single mention in November |
| Basis of Preparation | A written note stating your boundary, which factors you used, and how you handle estimates and data gaps |
| Data-quality controls | A review step that catches errors before they reach the report, not "one person checks it in Excel" |
| Inventory completeness | Confidence that no facility, fleet, generator or refrigerant source was missed |
| When | Assurance scope |
|---|---|
| First years | Limited assurance (a review) starting with governance, strategy risks and opportunities, and Scope 1 and 2 emissions, then broadening to all disclosures |
| FY commencing on/after 1 July 2030 | Reasonable assurance (a full audit) over all disclosures |
Where the numbers actually go wrong
Scope 1 and 2 carry no transitional liability protection, so this is where your first-year effort should concentrate. Two mistakes surface again and again in early engagements:
The wrong state factor. Scope 2 emission factors differ sharply by grid. A coal-heavy state's factor is several times a hydro-heavy state's. Applying a single national factor, or the wrong state's, makes your numbers materially wrong before the assurer even opens the workbook. Use the current-year NGA Factors, matched to each site's state.
Unit mismatches. Gas billed in megajoules on one invoice and gigajoules on another is a factor-of-1,000 error waiting to sit quietly in a spreadsheet cell. A source-linked trail catches this; an eyeballed cell reference doesn't.
Preparation checklist
Now: confirm your group classification at the consolidated level, appoint a project lead with cross-functional authority, map your Scope 1 and 2 sources, and study published Group 1 reports.
Next 6 months: stand up data collection for energy, fuel and emissions; calculate a baseline Scope 1 and 2 inventory using NGA Factors (reporting software built for Group 2 automates the invoice-to-factor grind); formalise board governance; run a climate risk assessment.
Pre-reporting: begin Scope 3 scoping even though it's deferred, prepare qualitative scenario analysis (including a 1.5°C pathway), select an assurance provider early, and draft your first report.
Key differences from Group 3
Both cohorts get the same one-year Scope 3 deferral, so that isn't where they differ. Group 2 reports a year earlier (July 2026 vs July 2027), sits above higher size thresholds, and, unlike Group 3, can't fall back on the materiality opt-out. As a larger entity you'll also face closer scrutiny, so aim for high-quality disclosures from the outset.
Get Group 2 ready for FY2026–27
Our AI Sustainability Analyst builds your Scope 1 and 2 baseline now and scopes Scope 3 for year two, audit-ready and documented row by row.
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