Why You Need to Report: Australian Sustainability Reporting Legislation

Key takeaways

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Schedule 4) amends the Corporations Act 2001 to require large entities to include a sustainability report with their annual financial report, under AASB S1 and S2 (aligned with the ISSB's IFRS S1 and S2).

Entities fall into three groups and are in if they meet at least two of three criteria: Group 1 ($500M revenue, $1bn assets, 500 employees, from 1 Jan 2025), Group 2 ($200M, $500M, 250, from 1 Jul 2026), and Group 3 ($50M, $25M, 100, from 1 Jul 2027).

Two pathways override the size tests: a registered NGER corporation is Group 1 if above the NGER publication threshold and Group 2 otherwise, and asset owners with $5bn or more in assets are Group 2.

Disclosures follow four pillars (governance, strategy, risk management, metrics and targets), consistent with TCFD. Every entity gets a one-year Scope 3 deferral, with Scope 3 mandatory from the second reporting year.

Because reporting sits inside the Corporations Act, directors are personally liable and penalties are steep: for a corporation the maximum civil penalty is the greatest of 50,000 penalty units (about $18.2 million), three times the benefit gained, or 10% of annual turnover.

If your organisation meets at least two of three size thresholds, you are now legally required to publish a sustainability report covering greenhouse gas emissions, climate risks, and transition plans, alongside your annual financial report. It sits inside the Corporations Act, so directors are personally accountable for it.

The legislation

In September 2024 the Australian Parliament passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. Schedule 4 amends the Corporations Act 2001 to require large entities to include a sustainability report with their annual financial report.

The standards themselves, AASB S1 (General Requirements) and AASB S2 (Climate-related Disclosures), were finalised by the Australian Accounting Standards Board and are closely aligned with the international ISSB standards (IFRS S1 and S2), adapted for the Australian context.

Who needs to report?

Entities fall into three groups by size. You're in a group if you meet at least two of three criteria for the financial year.

Group	Revenue	Gross assets	Employees	First reporting period
Group 1	≥ $500M	≥ $1B	≥ 500	1 January 2025
Group 2	≥ $200M	≥ $500M	≥ 250	1 July 2026
Group 3	≥ $50M	≥ $25M	≥ 100	1 July 2027

Two pathways override the size tests. A corporation registered under the National Greenhouse and Energy Reporting Act 2007 (NGER) is Group 1 if its emissions exceed the NGER publication threshold, and Group 2 otherwise. Asset owners with $5 billion or more in assets are Group 2.

What must you disclose?

Disclosures follow four pillars, consistent with the TCFD framework:

Governance: board and management oversight of climate-related risks and opportunities.

Strategy: climate risks and opportunities across short, medium and long-term horizons, including scenario analysis (with a 1.5°C scenario) and transition plans.

Risk management: how you identify, assess and manage climate-related risks.

Metrics and targets: Scope 1, 2 and 3 greenhouse gas emissions, industry-based metrics, and climate-related targets.

Transition reliefs

The legislation recognises this is new for many organisations:

Scope 3 emissions: every entity gets a one-year deferral, so Scope 3 becomes mandatory in your second reporting year (AASB S2 paragraph C4(b)).

Scenario analysis: qualitative analysis is permitted initially; quantitative isn't required from day one.

Comparative information: not required in the first reporting year.

Safe harbour: a modified liability framework protects entities from civil liability for Scope 3 disclosures and forward-looking statements made in good faith and on reasonable grounds.

The teeth in the regime

Because sustainability reporting sits inside the Corporations Act, existing enforcement applies. Penalties for false or misleading climate statements are steep: for a corporation, the maximum civil penalty is the greatest of 50,000 penalty units (about $18.2 million), three times the benefit gained, or 10% of annual turnover. Directors face personal liability for accuracy. ASIC is the regulator and has published Regulatory Guide 280 with its expectations.

What should you do now?

Start by confirming which group you're in and when your first reporting period begins. Then: assess your readiness (can you measure Scope 1, 2 and 3?), get familiar with AASB S2, engage your board on governance, and decide whether to bring in expertise or software to streamline the measurement work.

The reliefs and timelines differ by cohort. See the guides for Group 1 reporters (already reporting), Group 2 reporters (from July 2026) and Group 3 reporters (from July 2027).

What preparation usually costs

Through consultants, a first ASRS-aligned footprint with disclosure support typically runs into the tens of thousands, repeated each year. Kept fully in-house, it means someone on your team absorbing months of data entry. There's a third option: our AI Sustainability Analyst takes on the manual work, reading whatever your finance systems and suppliers send through, and leaves the judgement calls to you.

Not sure which group you're in?

Find your group in about a minute against the three size tests, then see exactly what it asks of you and when.

Find your ASRS group

Frequently asked questions

What law requires sustainability reporting in Australia?+

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. Schedule 4 amends the Corporations Act 2001 to require large entities to include a sustainability report with their annual financial report, prepared under AASB S1 and S2, which are aligned with the ISSB's IFRS S1 and S2.

Who has to report?+

Entities that meet at least two of three size tests. Group 1 ($500M+ revenue, $1bn+ assets, 500+ employees) reports from 1 January 2025, Group 2 ($200M, $500M, 250) from 1 July 2026, and Group 3 ($50M, $25M, 100) from 1 July 2027. A registered NGER corporation is Group 1 if above the NGER publication threshold and Group 2 otherwise, and asset owners with $5bn+ in assets are Group 2.

What are the penalties for a false or misleading climate statement?+

Because reporting sits inside the Corporations Act, existing enforcement applies. For a corporation the maximum civil penalty is the greatest of 50,000 penalty units (about $18.2 million), three times the benefit gained, or 10% of annual turnover. Directors face personal liability for accuracy, and ASIC is the regulator.

What must the report disclose?+

Four pillars consistent with TCFD: governance, strategy (including scenario analysis with a 1.5 degree scenario and transition plans), risk management, and metrics and targets (Scope 1, 2 and 3 emissions, industry-based metrics and climate targets).

Is there any relief for first-time reporters?+

Yes. Every entity gets a one-year deferral on Scope 3 (mandatory from year two), qualitative scenario analysis is permitted initially, comparative information is not required in the first year, and a safe-harbour framework protects Scope 3 and forward-looking statements made in good faith and on reasonable grounds.