Australia’s sustainability reporting landscape has shifted from largely voluntary disclosure to mandatory climate-related reporting. From 1 January 2025, many large businesses and financial institutions must publish climate-related financial disclosures as part of their annual reporting obligations, moving sustainability firmly into the mainstream of corporate governance and reporting.
At the center of this shift are the Australian Sustainability Reporting Standards, or ASRS. Developed by the Australian Accounting Standards Board (AASB), the standards give companies a consistent framework for reporting climate-related risks and opportunities in a way that is more comparable and decision-useful for investors and other stakeholders.
For finance teams, sustainability leaders, boards, and risk professionals, climate disclosure is becoming part of core reporting, governance, and assurance.
In this article, we’ll cover:
- What are the Australian Sustainability Reporting Standards (ASRS)?
- What are AASB S1 and S2?
- Scope and timeline of implementation
- Disclosure requirements
- Scenario analysis requirements
- Assurance requirements
- ASRS vs IFRS
- How companies can prepare for ASRS compliance now
What are the Australian Sustainability Reporting Standards?
The Australian Sustainability Reporting Standards are Australia’s formal framework for sustainability-related financial disclosure, with an immediate and practical focus on climate reporting. The standards were finalized by the Australian Accounting Standards Board in September 2024, following the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, which received Royal Assent on 17 September 2024 and brought mandatory climate-related financial disclosures into Australia’s corporate reporting regime. The disclosure requirements are mandated through amendments to the Corporations Act 2001 and are being phased in across three reporting groups from 2025 onward.
In practice, the ASRS is designed to ensure climate information is reported with the same discipline as financial information. It drives transparency among Australian companies to show how climate-related risks and opportunities affect governance, strategy, risk management, capital allocation, and long-term resilience.
AASB S1 and AASB S2
The current ASRS landscape is built around two standards: ASSB S1 and AASB S2. AASB S1 sets out general requirements for disclosing sustainability-related financial information and is currently voluntary under Australian law. AASB S2, by contrast, is mandatory and focuses on standard disclosures on climate-related risks and opportunities for entities that fall within the reporting regime, in line with Australia’s “climate first” approach.
AASB S2 is closely aligned with IFRS S2 but includes Australian-specific modifications — most importantly Appendix D, which incorporates the relevant IFRS S1 disclosure mechanics (materiality, fair presentation, judgements, errors, comparatives) scoped to climate so it can operate as a standalone mandatory standard under local law. AASB S1, by contrast, is adopted from IFRS S1 without modification; the only Australian “change” is its voluntary status. That means companies already familiar with ISSB-based reporting may have a head start, but they still need to account for Australia’s legal context and assurance requirements.
In December 2025, the AASB also issued AASB S2025-1 Amendments to Greenhouse Gas Emissions Disclosures, providing targeted relief in response to international implementation feedback.
Scope and timeline of implementation
The reporting regime is being introduced in stages.
Group 1 entities began from financial years starting on or after 1 January 2025. These are generally the largest reporting entities and certain large financial institutions captured first under the Corporations Act framework, typically because they meet at least two of three size thresholds: consolidated revenue ≥ AU$500 million, consolidated gross assets ≥ AU$1 billion, or 500 or more employees. Group 1 also captures registered NGER (National Greenhouse and Energy Reporting) reporters above the 50 kt CO₂-e emissions threshold, even if they do not otherwise meet the size criteria — an Australian-specific mechanism that pulls high-emitting entities into the first wave on emissions grounds rather than size grounds.
Group 2 entities follow from financial years starting on or after 1 July 2026. This group covers other large entities (broadly: ≥ AU$200M revenue, ≥ AU$500M gross assets, or ≥ 250 employees — meeting two of three thresholds — and superannuation trustees with ≥ AU$5B in assets under management) that are still substantial in scale but fall below the Group 1 thresholds.
Group 3 entities follow from financial years starting on or after 1 July 2027. These are smaller, but still in-scope, entities (broadly: ≥ AU$50M revenue, ≥ AU$25M gross assets, or ≥ 100 employees) including certain not-for-profits that meet the lower statutory thresholds for mandatory climate reporting.
In broad terms, the phased approach is designed to bring the largest and most resource-capable entities into the regime first, before extending the obligations to a wider set of businesses over time.
Determining whether an organization is in scope depends not only on size, but also on reporting obligations under the Corporations Act and, in some cases, National Greenhouse and Energy Reporting status.
| Meet at least two of three thresholds | NGER reporters included | Other included entities | Start reporting on or after | |
| Group 1 | · Consolidated revenue ≥AU$500m
· Consolidated gross assets ≥AU$1bn · ≥500 employees |
Any NGER reporters above the 50 kt CO₂-e emissions threshold | 1 January 2025 | |
| Group 2 | · Consolidated revenue ≥AU$200m
· Consolidated gross assets ≥AU$500m · ≥250 employees |
All other NGER reporters | Superannuation trustees with ≥AU$5bn in assets under management | 1 July 2026 |
| Group 3 | · Consolidated revenue ≥AU$50m
· Consolidated gross assets ≥AU$25m · ≥100 employees |
Not-for-profits that meet thresholds for mandatory climate reporting | 1 July 2027 |
Disclosure requirements
The structure of AASB S2 follows four familiar pillars: governance, strategy, risk management, and metrics and targets. This structure reflects the broader international sustainability reporting architecture and is designed to help readers understand how climate issues are overseen, how they affect the organization’s strategy and financial position, how risks are managed, and how performance is measured over time.
In practice, sustainability reports may include climate-related risks and opportunities, governance arrangements, strategic impacts, resilience analysis, emissions data, and climate-related targets. Companies are also expected to explain how climate matters influence decision-making and risk oversight, including mandatory disclosure of Scope 1, Scope 2 and Scope 3 GHG emissions in accordance with AASB S2 (with Scope 3, including financed emissions, deferred to the entity’s second reporting year under the Appendix C transitional reliefs).
Year 1 transitional reliefs. AASB S2 Appendix C provides three reliefs that every first-year reporter can use: no comparative information (paragraph C3), continued use of a non–GHG Protocol measurement method (paragraph C4(a)), and deferral of Scope 3 emissions including financed emissions to Year 2 (paragraph C4(b)).
Directors’ declarations also form part of the reporting package. For the first three reporting years, directors are only required to declare whether the entity has taken reasonable steps to ensure the sustainability report complies with the Corporations Act and ASRS — not full compliance. That said, governance accountability remains central, which is why many organizations are focusing on stronger evidence, documentation, internal controls, and management sign-off processes.
The role of scenario analysis
Scenario analysis is one of the more demanding parts of the regime. Companies are expected to assess climate resilience using scenario-based analysis rather than broad statements of intent, helping explain how different climate futures could affect strategy, operations, and financial outcomes.
Importantly, the Corporations Act prescribes the scenarios to be used. Entities must conduct scenario analysis against two specific temperature scenarios consistent with the Climate Change Act 2022:
- A low warming scenario limiting the increase in global average temperature to 1.5°C above pre-industrial levels; and
- A high warming scenario in which warming “well exceeds” 2°C above pre-industrial levels (interpreted as 2.5°C or higher, consistent with the Supplementary Explanatory Memorandum).
Because scenario analysis is one of the more complex and judgment-heavy parts of the regime, companies need to support it with credible assumptions, clear methodologies, and evidence that links the analysis to strategy, operations, and financial impacts.
Assurance is phased in—not optional forever
Another major feature of the regime is assurance. Australia is using a phased model, set out in the AUASB’s ASSA 5000 General Requirements for Sustainability Assurance Engagements and ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports Under the Corporations Act 2001, that starts with limited assurance over selected parts of the sustainability report and builds toward reasonable assurance over the full climate-related disclosure set. The longer-term destination is clear: for financial years beginning on or after 1 July 2030, the sustainability report is intended to be subject to reasonable assurance.
In March 2025, ASIC also released Regulatory Guide 280 Sustainability Reporting (RG 280), setting out how it will interpret, administer and enforce the new regime — including how it will monitor sustainability reports.
This has important implications for preparation. If teams treat Year 1 as a drafting exercise only, they may struggle as assurance expectations rise. A better approach is to design processes now with evidence trails, clear ownership, and review controls that can withstand future scrutiny.
How the ASRS differs from IFRS Sustainability Standards
Although the ASRS is closely aligned with IFRS S1 and IFRS S2, it is not a direct copy of the global standards.
The differences fall into two categories:
1. Technical modifications within AASB S2 itself (AASB S1 is adopted from IFRS S1 without modification). AASB S2 makes four substantive changes to IFRS S2:
- (i) Appendix D incorporates the IFRS S1 disclosure mechanics needed for AASB S2 to operate as a standalone standard;
- (ii) Aus20.1 sets consolidated reporting requirements;
- (iii) industry-based information requirements are modified; and
- (iv) not-for-profit user definitions are clarified.
2. Australian regime features sitting outside the standards, including the mandatory/voluntary status of AASB S2 and AASB S1 under the Corporations Act, the prescribed two-scenario analysis, the modified liability settings, and the AUASB-defined assurance phasing.
For multinational groups, even if a parent company already reports under IFRS-based sustainability standards, Australian entities may still need to prepare a separate ASRS-compliant sustainability report to meet local obligations.
How companies can prepare now
Companies that will navigate ASRS compliance most effectively are those that begin early with readiness then transition to reporting. A strong starting point is a gap assessment against AASB S2 requirements, covering climate risks, data quality, governance, controls, and disclosure processes.
Greenhouse gas inventories and scenario analysis are key priorities. Many organizations have only partial emissions data, but ASRS reporting requires a complete and decision-useful picture, especially where Scope 3 emissions and value chain impacts are material.
Preparation should also include governance design, clear accountability, and early engagement with assurance, audit, and legal stakeholders, including alignment with the expectations set out in ASIC’s RG 280 and the AUASB’s ASSA 5000 / ASSA 5010. Building these foundations now will reduce rework and support more credible reporting over time.
For years, ADEC ESG has worked closely with global clients to improve and align sustainability programs to better meet their sustainability goals. Contact our team to learn more about how we help companies across the globe strengthen performance and build resilient, impactful programs.
This blog provides general information and does not constitute the rendering of legal, economic, business, or other professional services or advice. Consult with your advisors regarding the applicability of this content to your specific circumstances.
