Australia's Mandatory Climate Reporting Is Here. We Handle It For You.

Australian entities must comply with mandatory climate-related financial disclosures if they meet at least two of three criteria: annual revenue, total assets, or employee count, within one of the three reporting groups. Group 1 entities (revenue > $500M, assets > $1B, or employees > 500) were required to begin reporting for financial years commencing on or after 1 January 2025. Group 2 entities (revenue > $200M, assets > $500M, or employees > 250) begin from 1 July 2026. Group 3 entities (revenue > $50M, assets > $25M, or employees > 100) begin from 1 July 2027. Companies that are subsidiaries of a Group 1 entity may also be captured even if they do not independently meet the thresholds.

AASB S2 is the Australian version of IFRS S2, the international climate disclosure standard published by the International Sustainability Standards Board (ISSB). The Australian Accounting Standards Board (AASB) adopted IFRS S2 with minor modifications for the Australian regulatory context — primarily to align with local corporate law, the Corporations Act 2001, and ASIC’s regulatory framework. For practical purposes, a disclosure that is AASB S2 compliant is also IFRS S2 aligned. Businesses operating in Australia should prepare disclosures under AASB S2, as this is the legally operative standard.

Under AASB S2, a compliant climate-related financial disclosure must address four pillars: Governance (board oversight of climate risk), Strategy (how climate risk affects business planning and financial position), Risk Management (identification, assessment, and control of climate-related risks), and Metrics and Targets (quantified greenhouse gas emissions across Scope 1, 2, and 3, plus climate-related targets). The disclosure must be included in or accompany the entity’s annual report and is subject to external assurance requirements that phase in over the compliance timeline.

Non-compliance with mandatory climate disclosure obligations in Australia can result in civil penalties under the Corporations Act 2001. ASIC has stated that enforcement will focus on the accuracy and completeness of disclosures rather than technical formatting in the early years. Directors of entities that fail to lodge required disclosures may face personal liability. ASIC has indicated it will apply proportionate enforcement during the initial transition years while businesses develop reporting capabilities, but this does not remove the legal obligation to report.

The time required to prepare a first-time AASB S2 compliant climate disclosure typically ranges from 8 to 20 weeks, depending on the complexity of the business, the availability of data, and the entity’s reporting group. Group 1 entities with complex supply chains and Scope 3 emissions requiring measurement across multiple categories will take longer than simpler businesses. Carbonhalo’s BCAP Fast Track program is designed to accelerate first-year compliance and can begin producing a GHG inventory and disclosure framework within days of engagement.

A Scope 3 emissions inventory measures greenhouse gas emissions that occur across a company’s value chain — upstream in the supply chain and downstream through the use of sold products. AASB S2 requires entities to disclose Scope 3 emissions where they are material to the entity’s overall emissions profile. The GHG Protocol defines 15 categories of Scope 3 emissions, ranging from purchased goods and services to business travel, employee commuting, and the end-of-life treatment of sold products. Many first-time reporters find Scope 3 the most complex element of the disclosure.

Carbonhalo delivers the complete disclosure package — not just the GHG inventory. This includes the baseline emissions assessment (Scope 1, 2, and 3), the AASB S2 gap analysis across all four disclosure pillars, the draft sustainability report structured for board approval and ASIC lodgement, and ongoing support through the assurance process. The service operates as an outsourced climate reporting team, meaning businesses do not need to hire internal sustainability staff to achieve compliance.