The global landscape of corporate reporting is undergoing a significant transformation, with Environmental, Social, and Governance (ESG) factors taking centre stage. Australia has firmly embraced this shift, enacting landmark legislation that mandates climate related financial disclosures for a broad range of entities. This move, finalised by the Australian Parliament in August 2024, aims to enhance transparency, empower investors, and support the nation’s transition towards a more sustainable economy.

Who Needs to Report and When? A Phased Approach

The introduction of these mandatory disclosures is staggered across three distinct groups, based primarily on size and emissions profiles. It’s crucial for all entities (companies) to identify which group they fall into to understand their compliance timeline:

Group 1: These entities are the first to be subject to the new rules, with reporting obligations commencing for financial years starting on or after 1 January 2025.

As of the current date (May 2025), these organisations are now navigating their first reporting period. Group 1 typically includes entities that meet at least two of the following three criteria:

    • Consolidated revenue of $AUD500 million or more.
    • Consolidated gross assets of $AUD1 billion or more.
    • 500 or more employees.
    • Additionally, National Greenhouse and Energy Reporting (NGER) reporters who meet the NGER publication threshold fall into this initial phase.

Group 2: The next cohort will commence reporting for financial years starting on or after 1 July 2026.

This group generally includes entities meeting at least two of these criteria:

      • Consolidated revenue of $AUD200 million or more.
      • Consolidated gross assets of $AUD500 million or more.
      • 250 or more employees.
      • Other NGER reporters not captured in Group 1, and asset owners (such as registrable superannuation entities) with $AUD5 billion or more in assets under management, are also typically included in Group 2.

Group 3: The final phase will apply to financial years starting on or after 1 July 2027.

Entities in this group generally meet at least two of the following:

        • Consolidated revenue of $AUD50 million or more.
        • Consolidated gross assets of $AUD25 million or more.
        • 100 or more employees. (This threshold aligns closely with the definition of a large proprietary company).

Key Reporting Obligations: What Must Be Disclosed?

At the heart of the new regime is the requirement for an annual Sustainability Report, which will form part of an entity’s overall annual reporting package alongside the financial report and directors’ report. This Sustainability Report must prominently feature:

1. Climate Statement

Prepared in accordance with AASB S2, this statement must detail:

    • Material climate-related risks and opportunities: How climate change could impact the entity’s business model, strategy, and financial performance.
    • Governance: The board’s oversight and management’s role in assessing and managing climate-related risks and opportunities.
    • Strategy and Resilience: The entity’s strategy for addressing climate risks and opportunities, including resilience assessed through scenario analysis (e.g., against 1.5°C and >2°C warming scenarios).
    • Risk Management: How climate-related risks are identified, assessed, and managed.
    • Metrics and Targets: Including Scope 1, Scope 2, and (with a one-year phase-in for disclosure) Scope 3 greenhouse gas (GHG) emissions, as well as progress against climate-related targets.
    • Transition Plans: Details of any plans the entity has to transition towards a lower-carbon economy.

2. Financial Matters Concerning Environmental Sustainability

The report must clearly articulate how climate-related factors influence the entity’s financial position, performance, and cash flows.

3. Directors’ Declaration

Directors will be required to declare whether, in their opinion, the climate statements comply with the Corporations Act 2001 and the relevant Australian Sustainability Reporting Standards.

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Climate Related Financial Disclosures – Assurance and Liability Considerations

The climate-related disclosures within the Sustainability Report will be subject to new assurance requirements, which are expected to be phased in over time. The Auditing and Assurance Standards Board (AUASB) is developing Australian-specific assurance standards for these engagements.

Recognising the complexities of some forward-looking statements, the legislation includes provisions for a temporary, modified liability regime for disclosures relating to Scope 3 emissions, scenario analysis, and transition plans for a defined initial period.

Why These Reforms Are Crucial?

These mandatory disclosure laws are a pivotal step for Australian businesses and the broader economy, aiming to:

  • Enhance Transparency: Provide investors, regulators, and the public with more precise, more comparable information on how companies are managing climate-related financial impacts.
  • Improve Risk Management: Encourage robust identification, assessment, and management of climate risks within organisations.
  • Drive Investment: Facilitate more informed capital allocation towards sustainable activities and businesses that are well-positioned for the transition.
  • Align with Global Standards: Ensure Australia keeps pace with international developments in sustainability reporting, maintaining its attractiveness for global capital.
  • Support National Climate Goals: Contribute to Australia’s overall efforts to achieve its emissions reduction targets.

Preparing for the New Era of Reporting

For businesses potentially impacted by these laws, proactive preparation is key:

  1. Determine Your Reporting Timeline: Accurately assess which Group your entity falls into.
  2. Familiarise Yourself with ASRS: Deeply understand the requirements of AASB S2.
  3. Establish Robust Data Systems: Develop or enhance processes for collecting, managing, and verifying climate-related data, particularly for GHG emissions across all scopes.
  4. Integrate Climate into Core Processes: Embed climate considerations into existing governance frameworks, strategic planning, and risk management procedures.
  5. Assess Capabilities: Identify any gaps in internal expertise and consider the need for external advice or training.
  6. Engage Stakeholders: Communicate with investors, board members, and other stakeholders about your approach to climate-related disclosures.
  7. Consider Supply Chain Impacts: Understand that even if not directly reporting, larger entities may require climate-related information from their suppliers.

About Infinity Constructions

At Infinity Constructions, we understand that sustainability is more than just a concept—it’s a responsibility. As a leading Tier 2 construction company operating in Sydney and Melbourne, we actively embed Environmental, Social, and Governance (ESG) principles into our projects, culture, and partnerships.

With over three decades of experience delivering award-winning commercial, hospitality, and adaptive reuse developments, we’re committed to aligning our operations with the evolving regulatory landscape, including climate-related financial disclosures and sustainable construction standards.

We partner with forward-thinking developers and consultants to future-proof our projects and ensure long-term environmental and financial resilience.

Explore some of our innovative and sustainability-aligned work:

Discover how Infinity Constructions is helping to build a smarter, more sustainable Australia.

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