Do we have to do mandatory climate reporting?

You must prepare a sustainability report if you already lodge a financial report under Chapter 2M of the Corporations Act and you also meet one of the size, NGER or funds-under-management tests in section 292A. Both gates have to be passed: with no Chapter 2M obligation, section 292A never engages however large you are. Which of the three reporting groups you fall into decides which financial year is your first.

Do we need comparatives in our first report?

No. AASB S2 relieves first-time reporters from disclosing comparative information in their first annual reporting period, and comparatives are required from year two. That means your year-one numbers and working papers will be looked at again, so build the year-one file as if it will be re-examined.

Glossary›Regulation, capture and thresholds / Regulation, capture and timing›Sustainability report (Corporations Act)

Glossary term

Cluster B · B7

Tier 1 · differentiator

Sustainability report (Corporations Act)

Q: What does the board have to sign?

The directors' declaration in the sustainability report. For financial years commencing between 1 January 2025 and 31 December 2027, directors declare they have taken reasonable steps to ensure the report complies with the Corporations Act. From financial years commencing 1 January 2028, they declare their opinion that it does comply.

Definition

A sustainability report is the statutory report required by section 292A of the Corporations Act. It contains the climate statements for the financial year, any notes to those statements, and the directors’ declaration. It is lodged with ASIC together with the financial report and the directors’ report, and it must be assured.

Corporations Act 2001

· sections 292A, 296A and 296D ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Timing and relief
Sources
Related terms
Related questions

Cluster

B · Regulation, capture and thresholds / Regulation, capture and timing, 26 terms

In practice

The report has three components and the third is the one directors focus on.

The climate statements are the AASB S2 disclosures: governance, strategy, risk management, and metrics and targets, including greenhouse gas emissions.

The notes explain, expand and disclose the judgements and methods behind the statements.

The directors’ declaration is the board’s statement about the report. For financial years commencing between 1 January 2025 and 31 December 2027 inclusive, it is modified so that directors declare they have taken reasonable steps to ensure the report is in accordance with the Corporations Act. After that transitional period, the declaration reverts to an opinion that the report complies.

The sustainability report is a distinct report, not a section of the annual report. It has its own statutory contents, its own declaration and its own assurance report.

What the assurer does with it

The assurer’s conclusion attaches to this report as a defined document, so the first thing they establish is its boundary: which pages are the sustainability report and which are surrounding annual-report content. They read the whole document, including unassured voluntary material, for material inconsistency with the assured information and with the financial report. They check that the declaration is inside the report, dated no earlier than the conclusion, names the correct entity and period, and uses the currently applicable form of words. They reject a sustainability report presented as a chapter of an ESG brochure with no identifiable statutory boundary.

Commonly confused with

The annual report and the voluntary ESG or sustainability report a business may already publish. The Corporations Act sustainability report is a separate statutory document with its own contents, its own declaration, its own assurance and its own lodgement form.

Timing and relief

The modified directors’ declaration applies for financial years commencing 1 January 2025 to 31 December 2027 inclusive. From financial years commencing on or after 1 January 2028 the declaration becomes an opinion that the report is in accordance with the Act.