How to Prepare for ASRS: Group 3 Reporters

If you meet at least two of $50M revenue, $25M gross assets, or 100 employees, you'll lodge your first sustainability report for financial years starting on or after 1 July 2027. Group 3 has the gentlest on-ramp: the latest start, a materiality opt-out no other cohort gets, and a year's deferral on Scope 3. The data systems and governance behind a report still take 12–18 months to build, so starting early is the advantage.

Are you actually in? Run the two-of-three test

You're a Group 3 entity if you meet at least two of these three at the end of the financial year: $50M+ consolidated revenue, $25M+ consolidated gross assets, or 100+ employees. These are the existing "large proprietary company" thresholds under the Corporations Act, so if you already lodge financial reports as a large proprietary company, you're almost certainly caught. The obligation attaches automatically, with no separate registration. For the regime as a whole — every group, the NGER and asset-owner pathways, and the penalties behind it — see Australia's sustainability reporting legislation.

The two-of-three structure catches businesses that feel too small, and lets others out:

If you sit near any threshold, confirm it now against your latest financials. Being wrong about your status isn't a grey area. Getting your accountant to check the two-of-three test takes an afternoon; discovering you were in scope after the reporting period starts does not.

When does reporting begin?

Group 3 begins for financial years starting on or after 1 July 2027. For a standard 30 June year-end, your first report covers FY2027–28, published with your annual financial report in late 2028. Distant as that sounds, the preparation (data systems, governance, assurance readiness) takes time, and you can learn from Group 1 (from January 2025) and Group 2 (from July 2026).

What transition reliefs are available?

Group 3 gets the most gradual on-ramp under AASB S2 and the Treasury Laws Amendment Act 2024:

Scope 3 emissions: deferred for your first reporting year (AASB S2 paragraph C4(b)). You report Scope 1 and 2 from day one, and Scope 3 becomes mandatory in your second year: FY2028–29 for a 30 June year-end. This one-year deferral is the same for every cohort. Group 3 isn't Scope 3-exempt for longer; it simply starts later.

Scenario analysis: qualitative is permitted for an extended initial period.

Comparative information: not required in your first year.

Materiality opt-out: unique to Group 3 under Corporations Act s296B; covered below.

Safe harbour: Scope 3 and forward-looking statements are shielded from private litigation, provided they're made in good faith and on reasonable grounds. Only ASIC can take non-criminal action during the transition window.

What you need to disclose

Your report must comply with AASB S2: Governance (how your board and management oversee climate risk), Strategy (risks, opportunities, business-model impact, transition plan), Risk management (how you identify, assess and manage climate risk), and Metrics and targets (Scope 1 and 2, with Scope 3 deferred, plus any climate targets).

Can you opt out on materiality?

There is a narrow path: if you genuinely determine your business has no material climate-related risks or opportunities, you don't produce a full AASB S2 disclosure. But it isn't an exit.

You still publish a sustainability report. It must contain a statement that you assessed materiality and concluded there are none. Directors still sign off, and an auditor still reviews it. In practice you'd be telling your board and the market that climate change doesn't materially affect your energy costs, insurance, supply chain, physical assets or exposure to changing regulation and customer expectations, and be able to show the assessment was genuine, not a rubber stamp. For most Group 3 entities the honest answer is that some climate risk exists; the real work is assessing how material it is and disclosing it proportionately.

A practical preparation timeline

Now – mid 2026, build foundations: confirm your group, assign a sustainability lead, audit the emissions data you already have (energy bills, fuel records, fleet data), and review published Group 1 reports.

Mid 2026 – mid 2027, develop capabilities: implement ongoing Scope 1 and 2 data collection (consider carbon accounting software built for Group 3 to automate it), establish board governance, run a climate risk assessment, and begin qualitative scenario analysis.

Mid 2027 – first report, execute: calculate Scope 1 and 2 using NGA Factors, prepare the report aligned to AASB S1 and S2, engage an assurance provider early, and start collecting Scope 3 data ahead of the deadline.

On the numbers themselves: for Scope 2, the location-based method (state grid emission factors from the NGA Factors workbook) is the required basis; a market-based figure is voluntary and supplementary. The state you operate in moves the result materially. The same office draws a very different Scope 2 figure in a coal-heavy grid than in a hydro- or renewables-heavy one. Two common, avoidable errors surface under assurance: using the wrong state's factor, and using the wrong year's factor (they're updated annually). If you already report under NGER, AASB S2 lets you carry those Scope 1 and 2 methodologies straight into your ASRS disclosure.