Mandatory climate reporting in Australia: what boards need to know

The era of voluntary, feel-good sustainability reports is over. With the introduction of mandatory climate reporting in Australia, the game has fundamentally changed. For company directors, this isn't a niche issue for the sustainability team anymore; it's a core governance and risk management responsibility with real legal consequences.

Starting from 1 January 2025, thousands of Australian companies will be legally required to report on their climate-related risks and opportunities. Getting this right is not just about compliance—it's about demonstrating strategic foresight and maintaining market credibility. Boards need to get across the detail, and quickly.

What are the Australian Sustainability Reporting Standards (ASRS)?

The new regime is built around two core standards developed by the Australian Accounting Standards Board (AASB):

AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information: This is the foundational standard. It sets out the core requirements for how a company should report its sustainability-related risks and opportunities. Crucially, it requires these disclosures to be connected to the financial statements and released at the same time.
AASB S2 Climate-related Financial Disclosures: This is the first topic-specific standard, focusing entirely on climate. It is based heavily on the international IFRS S2 standard and the previous TCFD framework. It mandates disclosures across four key pillars: Governance, Strategy, Risk Management, and Metrics & Targets.

This means companies won't just be reporting their greenhouse gas emissions. They'll need to disclose how the board oversees climate risk, how climate change impacts their strategy and financial planning, the processes for managing those risks, and the specific targets they have in place to address them.

Who reports and when?

Treasury has outlined a phased, three-group approach to implementation. Your company's group determines your start date:

Group 1 (from 1 July 2024): The largest players. This includes NGER reporters who meet the NGER 'controlling corporation' publication threshold, and other entities with over $500 million in revenue, $1 billion in assets, and 500+ employees. Certain asset owners over $5 billion will also be captured.
Group 2 (from 1 July 2026): The next tier down. This captures entities with over $200 million in revenue, $500 million in assets, and 250+ employees. NGER reporters not captured in Group 1 will also fall in here.
Group 3 (from 1 July 2027): The final wave. This includes entities with over $50 million in revenue, $25 million in assets, and 100+ employees.

It's important to note that the thresholds apply to the consolidated group. Even if your specific entity is small, you may be captured if your parent company meets the criteria. An initial temporary exemption for Group 3 entities has ended, meaning all three groups are now legislated to report.

What's the board's role and liability?

This is where the rubber hits the road for directors. Under the ASRS, climate disclosures will be part of the annual report, subject to a directors' declaration. This means the board will be signing off on the veracity of the climate-related statements, just as they do for the financial statements.

This elevates the data quality, governance, and internal controls required. Disclosures will be subject to assurance (auditing), starting with 'limited assurance' and moving toward 'reasonable assurance' over time. This scrutiny from auditors, investors, and the regulator (ASIC) significantly raises the stakes.

ASIC has been very clear that it will be actively monitoring for greenwashing and misleading claims. Incomplete, inaccurate, or unsubstantiated disclosures could expose the company and its directors to liability under the Corporations Act.

Key questions for your next board meeting

Directors don't need to be climate scientists, but they do need to be climate literate and demonstrate active oversight. Here are some questions to ask in your next board meeting:

Readiness: Have we confirmed which reporting group we fall into and what our start date is?
Governance: Do we have a clear governance structure for climate risk? Is it assigned to a specific board committee, like Audit & Risk?
Capability: Does the board and management have the necessary skills to oversee this? Have we scheduled training?
Strategy: Have we begun to assess the financial impacts of climate-related risks and opportunities on our business model and strategy, including via scenario analysis?
Data: What is our plan for gathering, managing, and verifying the data required for disclosure, especially Scope 1, 2, and material Scope 3 emissions?
Resourcing: Do we have a clear budget and project plan for implementation? Who is the accountable executive?

The bottom line

Mandatory climate reporting is the most significant change to corporate reporting in a generation. It formalises the link between climate performance and financial performance. For boards, this is a call to action: to embed climate considerations into governance, strategy, and risk management with the same rigour applied to all other material business issues.