The new climate-related financial disclosure laws have started: hundreds of Group 1 entities, representing Australia’s largest businesses, must now prepare their new sustainability reports, which outline their climate-related disclosures, in addition to their annual financial statements – and the lodgement deadlines are fast approaching. And Group 2 and 3 entities are right behind them.

Most businesses are facing these requirements for the first time. The penalties for non-compliance include regulatory scrutiny, reputational damage, and potential financial penalties.

So what should businesses facing this for the first time expect, and how early should they start their preparations? We explore this topic, taking a practical approach with insights from businesses that have well and truly kicked things off.

What to Expect Before You Begin

Organisations new to climate reporting face these common challenges:

• Lack of clear responsibility: Many struggle to determine who owns climate disclosure preparation—  finance, risk, operations, legal, or sustainability? There is no common answer, but establishing this ownership early is essential.
• Fragmented data: The data required for compliance is often scattered across different departments, incomplete, and not in the right format.
• Knowledge gaps: Understanding the new disclosure requirements and calculating emissions accurately requires technical expertise many organisations lack.
• Decisions around external support: Finding the right expert support and technology solutions takes time and careful vetting.

The key to solving these challenges is time. This is not a project that can be rushed in the flurry of end-of-year reporting.

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A Practical Timetable for Success

To help with planning, here’s an overarching timeline for completing your requirements, with some key steps listed below.

1. Establish Awareness & Assign Responsibilities (1-3months)

• Educate leadership: Ensure the Board and senior leadership understand legal climate reporting obligations, including director liabilities.
• Appoint a climate reporting lead: Identify an executive to own the overall process.
• Implement a governance structure: Form a working group that will oversee climate related risks, opportunities and recommend decisions required to achieve compliance.

2. Establish the Required Expertise (2-6 months)

• Identify responsibility for emissions calculations: Whether insourced or outsourced, assign a leader to oversee emissions assessments.
• Assign climate disclosure coordination: Assign responsibility for overseeing and coordinating the nearly 100 disclosures to be completed.
• Select technology solutions: Fully integrated software takes months to procure and upwards of six months to implement, while simpler solutions can be set up within a few weeks.
• Engage external experts: Even with software, most organisations require expert support for addressing data issues, facilitating disclosure gap assessments, report preparation and technical advice.
• Determine your auditor: Appoint an auditor for emissions and sustainability disclosures - typically the same as for financial statements.

3. Complete Your Emissions Footprint (2-6 months)

• Define emissions boundaries: Establish which business operations are in scope.
• Identify required emissions categories: While only Scope 1 and 2 emissions are mandatory in year one, many businesses also start measuring Scope 3 for future compliance.
• Collect and standardise data: Finding, reviewing, transposing, gap filling, documenting and recording evidence of source data can take months and cross-department coordination.
• Apply emissions factors and calculations: Apply your organisational source data to relevant Australian and global emission factor databases.
• Prepare an emissions footprint report: Summarise the findings in a report ready for audit. Ensure data and reporting is aligned to the GHG Protocol     or ISO14064 standard.

4. Develop Climate-Related Disclosures (4-9 months)

• Conduct a gap assessment: Determine which disclosures can be completed now (very few are likely) and where new processes, procedures and analysis are required to complete the balance.
• Develop an action plan: Assign responsibilities and deadlines for completing disclosure gaps.
• Complete key disclosure assessments: Identify climate-related risks, opportunities, scenario analysis, target setting, and executive remuneration links.
• Document disclosures and supporting evidence: Ensure full compliance with reporting standards.

5. Prepare Your Sustainability Report (1-2 months)

• Draft the report: Compile completed disclosures and emissions assessments into a complying report.
• Undergo an audit: Have an auditor review and verify compliance against the new audit standards.
• Secure director sign-off: Obtain approval from company directors before submission.
• Lodge with ASIC: Ensure timely submission to the Australian Securities and Investments Commission (ASIC).
• Present at the AGM: Listed companies must also comply with ASX disclosure requirements.
• Publish the report: Post on the company website and distribute to stakeholders.

Key Takeaways

• Expect challenges: The first year will be about learning and refining processes.
• Start early: Early preparation prevents last-minute, rushed, and costly compliance issues.
• Get expert support: The right guidance can save time and reduce compliance costs.

Act Now

Businesses cannot afford to delay climate reporting preparations. With deadlines approaching fast, start assigning responsibilities, gathering data, and engaging experts today. The sooner you begin, the smoother the process will be. Don’t spoil your personal or business reputation by leaving this to the last minute!

If you're responsible for climate reporting and facing key challenges, don’t navigate them alone. Schedule a free discovery call with our experts to gain tailored support, expert advice, and practical solutions—helping you meet your reporting requirements with confidence and clarity.

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