Australia’s mandatory climate reporting regime is no longer a “watch this space” issue. It’s live, and it’s moving through the business population in stages. Group 1 entities, the largest listed companies and financial institutions, have already lodged their first sustainability reports. Now it’s Group 2’s turn, and for a much bigger slice of Australian business, that changes everything about what year-end preparation needs to look like.
If your organisation sits in the Group 2 cohort, or you’re not entirely sure whether it does, this is the moment to get your governance house in order. Here’s what’s actually happened and what needs to happen next.
What Group 2 Climate Disclosure Actually Means
Under changes made to the Corporations Act through the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, Australia introduced a phased, mandatory climate reporting regime. Group 1 entities started first, for financial years beginning on or after 1 January 2025. Group 2 entities follow for financial years commencing on or after 1 July 2026, with their first sustainability reports due for lodgement in 2027.
In practical terms, Group 2 climate disclosure has now commenced for any business that meets two of the three size thresholds set out in the legislation:
- consolidated revenue of $50 million or more
- consolidated gross assets of $25 million or more
- 100 or more employees
It also captures certain asset owners regardless of the standard size thresholds, specifically registrable superannuation entities and managed investment schemes holding $5 billion or more in assets under management, and all entities required to report under the National Greenhouse and Energy Reporting Act regardless of size.
Group 2 businesses must prepare a sustainability report containing mandatory climate-related financial disclosures under AASB S2, lodged alongside their annual financial report. While AASB S1 general sustainability disclosures remain voluntary in Australia at this stage, entities are encouraged to consider S1 as a complementary framework as the regime matures.
ASIC’s sustainability reporting hub sets out exactly which entities fall into which group and how the regime is administered. It’s worth checking this directly rather than assuming your business sits outside the net, because the size tests catch a wider range of mid-sized Australian companies than most directors expect.
Why This Isn’t Just a Finance Team Job
A common mistake businesses make is treating climate reporting compliance in Australia as something the finance or sustainability team can handle in isolation, close to the reporting deadline. That approach doesn’t hold up under the new regime.
Climate governance in Australia now sits squarely with the board. ASIC has been direct about this: directors are expected to understand their entity’s climate-related risks and opportunities, oversee the systems used to identify and monitor them, and ensure the integrity of what gets disclosed. This isn’t a compliance checkbox. It’s a governance obligation that needs proper board-level sign-off, documented decision-making, and evidence that oversight was genuinely applied, not just rubber-stamped.
Governance Actions to Take Before Year-End
Confirm your group classification properly. Don’t assume. Run the actual size test against your latest financials and headcount, and document how you reached your conclusion. If you’re borderline, get this checked now rather than after the reporting period closes.
Map your material climate risks and opportunities. This means physical risks (things like extreme weather affecting operations or supply chains) and transition risks (regulatory change, shifting customer expectations, changing input costs). Boards need a documented process for this, not an informal conversation.
Set up your data collection systems now. Scope 1 and 2 emissions data, and increasingly scope 3, needs to be captured consistently through the reporting period, not reconstructed after the fact. Waiting until close to lodgement almost always means gaps.
Review your governance structure and reporting lines. Who on the board owns climate oversight? Is there a committee responsible for it? Is management reporting to the board on this at a sensible frequency? ASIC expects to see this structure exist and function, not just appear on paper.
Understand the assurance requirements. First-year sustainability reports carry limited assurance requirements over scope 1 and 2 emissions. Your auditor needs to be looped in early, not after your numbers are locked.
Where Businesses Get Stuck
The honest reality is that mandatory climate reporting in Australia asks businesses to build governance muscle they’ve often never needed before. Boards that are experienced with financial reporting oversight are frequently new to climate risk assessment, scenario analysis, and the specific disclosure language AASB S2 requires.
This is where Anitech’s work with clients tends to focus. Anitech helps Australian businesses build the governance frameworks,and compliance management frameworks, and documented processes that sit behind a compliant sustainability report, translating what ASIC climate reporting expectations actually require into a practical, board-ready structure. Rather than scrambling to assemble disclosures at the last minute, businesses working with Anitech build the systems once and carry them forward each reporting cycle.
Getting Ahead of Year-End
Group 2 climate disclosure isn’t a future problem anymore. It’s a current one, and the businesses that treat this year-end as the point to properly stand up their governance processes will be in a far better position than those hoping their existing systems are close enough.
If your board hasn’t yet formally reviewed its climate governance structure against the new requirements, now is the time to do it. Anitech can help you build a compliance framework that holds up under ASIC scrutiny and keeps working as the regime moves through to Group 3.
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