If your business falls into the Group 2 reporting category, the clock is ticking.
From 1 July 2026, Group 2 entities will be required to start reporting climate-related financial disclosures for financial years commencing on or after that date. For most businesses in this category, that means data capture has already started and the first sustainability report will be due at the end of the 2026-27 financial year.
By June 2026, it is too late to start planning. Your governance framework needs to already be up and running. Organisations that delay preparation risk falling short on compliance once reporting obligations kick in, especially with ASIC overseeing enforcement of the mandatory climate disclosure regime.
What Is the Climate-Related Financial Disclosures Regime?
Australia’s mandatory climate-related financial disclosures regime was introduced through the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. Under the Corporations Act 2001, in-scope reporting entities are now required on a phased basis to prepare annual sustainability reports in parallel with their financial reports.
In plain terms, qualifying Australian businesses must now formally report on how climate-related risks and opportunities affect their operations, strategy, and financial position. This is no longer a voluntary ESG reporting exercise. It is a legal obligation under the Corporations Act, with ASIC overseeing compliance.
The regime is structured across three groups based on size and type. Group 1 commenced from January 2025. Group 2 obligations commence for financial years beginning after 1 July 2026, and Group 3 from 1 July 2027.
Who Is a Group 2 Entity?
This is the question most mid-market businesses have not answered clearly yet.
Group 2 entities include companies that meet two of three size thresholds. You can confirm your entity classification using the Treasury’s climate disclosure guidance. The thresholds are consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees. Asset owners with funds under management of $5 billion or more at the end of the financial year are also captured as Group 2C entities.
It also captures entities required to report under the National Greenhouse and Energy Reporting Act that do not meet the Group 1 publication threshold. If your business sits near or above these thresholds and you have not formally confirmed your Group 2 status, that confirmation is the first governance action to complete.
What Must Be Disclosed?
An entity’s sustainability report must include a climate statement for the relevant year, including applicable notes, any statement prescribed by the Regulations for the relevant year, and the directors’ declaration as to compliance of such statements with the Corporations Act and relevant sustainability standards.
The Australian Accounting Standards Board sustainability disclosure standards (AASB) cover four interconnected areas, including governance, strategy, risk management, and metrics and targets. Each area requires documented information that is supported by appropriate evidence that demonstrates how the business identifies, assesses, and manages climate-related financial risks and opportunities.
This is not a narrative exercise. ASIC will be reviewing sustainability reports as they are lodged and the directors’ declaration means personal accountability for the accuracy and completeness of what is reported.
Three Governance Gaps Most Group 2 Businesses Are Carrying
When organisations review their readiness for climate disclosure requirements in Australia, three gaps consistently surface as the most significant.
No formal climate risk governance structure. The disclosure framework requires evidence that the board oversees climate-related risks and that management assesses and manages them. If climate risk does not currently appear in board papers, risk registers, or management review agendas, the governance structure is not ready to support a compliant disclosure.
Incomplete or undocumented climate risk assessments. Sustainability reporting in Australia requires organisations to identify and assess both physical climate risks, including floods, heat and extreme weather, and transition risks, including regulatory change, carbon pricing and shifting market conditions. If neither category has been formally assessed and documented, the disclosure will not meet the standard.
No metrics, targets, or baseline data. The regime requires entities to report on the metrics and targets used to manage climate-related risks and opportunities. If your business has not yet established a baseline and documented measurable targets, the reporting obligation cannot be satisfied from a standing start. This data needs to have been collected from the beginning of the financial year, not assembled retrospectively.
What Prepared Looks Like in Practice
ASIC has urged all reporting entities, including those in the second and third reporting cohorts, to begin preparing for the new climate disclosure regime now.
A prepared Group 2 organisation has a board-level governance structure that formally oversees climate risk, a documented climate risk assessment covering both physical and transition risks, metrics and targets established and tracked from the start of the reporting period, and a sustainability report preparation process aligned to the AASB disclosure standards.
If any of these are absent, the gap between your current position and your reporting obligation is already opening, and it will be harder to close at year-end than it is to build now.
June 2026 Is Your Last Practical Preparation Window
For Group 2 entities that operate on a 1 July to 30 June financial year, the reporting period has already started. The governance framework, risk assessment, and data collection processes needed to support a compliant sustainability report need to be operational now, not assembled when the report is due.
At Anitech, we work with organisations to build the governance frameworks that support credible, compliant ESG and sustainability reporting, connecting climate risk assessment to board oversight, risk register integration, and the documented accountability trails that underpin defensible disclosure. If your organisation is a Group 2 entity and has not yet confirmed its readiness, June is the right time to have that conversation.
Anitech works with Australian businesses to build practical governance frameworks for sustainability reporting, risk management, and regulatory compliance. If your organisation is preparing for Group 2 climate disclosure obligations, we are here to help. anitechgroup.com
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