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.

What are the thresholds for Group 1, Group 2 and Group 3?

Group 1 is two of $500 million revenue, $1 billion gross assets and 500 employees. Group 2 is two of $200 million, $500 million and 250 employees, and Group 3 is two of $50 million, $25 million and 100 employees. All figures are consolidated and you test them every year.

We are a private company with no external shareholders. Are we still captured?

Yes, if you meet the tests. The regime is not limited to listed entities, so any entity that must lodge a financial report under Chapter 2M and meets a section 292A test is captured. That includes large proprietary companies, unlisted public companies and Australian subsidiaries of foreign groups.

Glossary›Regulation, capture and thresholds / Regulation, capture and timing›Mandatory climate reporting (Australia)

Glossary term

Cluster B · B1

Tier 1 · differentiator

Mandatory climate reporting (Australia)

Definition

Mandatory climate reporting is the Australian requirement for large entities to prepare an annual sustainability report containing climate disclosures made under AASB S2, lodge it with ASIC alongside the financial report, and have it assured. It was introduced into the Corporations Act in 2024 and is phased in across three groups of entities from 2025 to 2027.

Corporations Act 2001 Chapter 2M

· inserted by the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 ·

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Cluster

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

In practice

Three features distinguish this regime from the voluntary sustainability reporting that preceded it, and all three matter to a finance function.

It is a financial reporting obligation, not an environmental one. The sustainability report sits inside Chapter 2M of the Corporations Act next to the financial report, is lodged with ASIC on the same timetable, carries a directors’ declaration, and is subject to the same enforcement machinery.

It is assured. Section 301A requires the sustainability report to be audited, with limited assurance permitted during the phase-in under AUASB standards.

It is climate only, for now. The Corporations Act requires compliance with the climate standard, AASB S2. AASB S1 covers broader sustainability topics and is voluntary in Australia.

What the assurer does with it

The assurance provider works from ASSA 5000 and, for the phasing, ASSA 5010. Their first act is not fieldwork but engagement acceptance: confirming the entity is genuinely captured, which financial year is its first reporting period, and which group it falls into, because those three facts set the assurance level. They ask for the section 292A threshold calculation agreed to the audited consolidated financial statements. They reject a capture assessment built on management accounts or single-entity figures, because a wrong answer there is a non-compliance with the Act rather than a disclosure error.