Sustainability Reporting

Services

Mandatory sustainability reporting has arrived in Australia

Australia’s new sustainability reporting framework is now in effect and requires certain entities reporting under Chapter 2M of the Corporations Act 2001 to prepare a sustainability report which includes climate-related financial disclosures in accordance with Australian Sustainability Reporting Standards (ASRS) made by the Australian Accounting Standards Board (AASB).

There are effectively three key components to the new sustainability reporting framework:

Introduction of legislative changes to the Corporations Act 2001;
Australian Sustainability Reporting Standards (ASRS) issued by the AASB;
Australian Standards on Sustainability Assurance (ASSA) issued by the Auditing and Assurance Standards Board (AUASB)

Which entities are required to prepare mandatory sustainability reports?

Australian entities required to prepare and lodge a financial report with the Australian Securities and Investments Commission (ASIC) under Chapter 2M of the Corporations Act 2001 must prepare a sustainability report if they meet certain criteria.

The following types of entities are impacted, with certain exemptions and concessions applying for entities registered with the Australian Charities and Not-for-profits Commission (ACNC), and entities who elect to prepare only one sustainability report for the same Australian consolidated group that prepares a consolidated set of financial statements.

Entities in scope per the Corporations Act 2001 who are required to prepare sustainability reports:

Our guide to Australia’s new sustainability reporting framework can assist you further in determining whether your entity is subject to mandatory sustainability reporting, as well as when your entity will be required to report for the first time.

When are entities in scope required to report?

A phased approach to the first year of reporting will apply to entities in scope. It is important to first assess whether the entity is required to lodge a financial report under Chapter 2M of the Corporations Act 2001 before assessing what category they might fall under for the first year of reporting.

Mandatory reporting of climate-related disclosures for certain entities submitting financial reports to ASIC under Chapter 2M of the Corporations Act 2001 will commence for financial years beginning on or after 1 January 2025 for Group 1 entities, 1 July 2026 for Group 2 entities and 1 July 2027 for Group 3 entities.

What are the sustainability reporting standards?

The AASB issued the first sustainability reporting standards in September 2024, which are:

AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information – a voluntary Standard
AASB S2 Climate-related Disclosures – a mandatory Standard.

What are the assurance requirements over your sustainability report?

The sustainability report will be subject to assurance requirements similar to those currently prescribed in the Corporations Act 2001 for financial reports. The AUASB recently approved the adoption of ASSA 5000 General Requirements for Sustainability Assurance Engagements, which will apply to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025.

For mandatory climate reporting required under the Corporations Act 2001, the AUASB also approved ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001, which outlines the phasing in of limited and reasonable assurance over the relevant information required by AASB S2 Climate-related Disclosures for each of the three groups of entities.

The assurance phasing model adopted by the AUASB requires limited assurance over disclosure requirements relating to governance, strategy (risks and opportunities) and Scope 1 and 2 emissions in an entity’s first reporting year, moving to reasonable assurance for all mandatory disclosure requirements from the fourth year of reporting.

How William Buck can help

At William Buck, our expert audit and assurance advisors understand the challenges businesses face in adapting to Australia’s new sustainability reporting framework. We can help you navigate these challenges and stay ahead by explaining the reporting and assurance requirements and how your business is impacted. Sustainability reporting is a journey of continuous improvement. We can support you during your journey across all assurance needs, starting with initial assurance readiness as you prepare for formal reporting under the new legislation requirements.