Phased approach to mandatory climate reporting in Australia

Phased approach to mandatory climate reporting in Australia


The Australian government has proposed a new bill that would require certain entities to prepare annual sustainability reports, aiming to enhance the transparency and comparability of climate-related information.


To improve the disclosure and accountability of climate-related matters the Australian government’s final Policy statement proposes to mandate certain entities follow the new sustainability reporting standards issued by the AASB. This is consistent with the international sustainability standards.

The first group entities would need to prepare their sustainability report for annual reporting periods commencing on 1 July 2024, subject to submission feedback on a 6 month deferral, with smaller entities phased in over the next few years.

New reporting requirements

There is a new sustainability reporting requirement for reporting information on climate-related matters. If applicable, the sustainability report will need to be prepared together with the annual report.

The report will follow the new sustainability reporting standard issued by the Australian Accounting Standards Board, which is closely aligned with the international sustainability standard. This will provide much-needed comparability across the companies.

The requirement will be subject to the passing of the bill.

Who has to prepare annual sustainability reports and when

The government proposed a phased approach based on the size of the entities. The table below sets out the details of the threshold and date for the implementation.

The above table is extracted from Treasury Policy Statement

The smaller Group 3 (current Large Pty threshold) are only required to make climate disclosure if the entity has material risks or opportunities.

What do companies need to report?

The disclosure will need to follow the new stainability standards issued by AASB. The key areas of disclosure include:  

  • governance and strategies for climate-related matters
  • risks and opportunities associated with climate change
  • metrics and targets associated with emissions. This includes the current emissions by the company and from the electricity consumption (Scope 1 and 2 emissions) and the emission in the value chain (known as Scope 3 emission).

In addition to a qualitative description of the risks and opportunities, the company is also required to disclose a quantitative scenario analysis. There are several reliefs proposed by the government in relation to more complex disclosure on Scope 3 emission and quantitative analysis.

The above disclosure will need to be included in a new annual sustainability report. The structure and content of the sustainability report consists of:

  • the climate statements for the year
  • any notes to the climate statements
  • any statements required by other legislative instruments to include matters concerning environmental sustainability and
  • the directors’ declaration about the statements and the notes.

The annual sustainability report will be presented together with the financial report.

Audit requirements

The company’s financial auditor will also audit the sustainability report. The content subject to assurance will gradually move from Scope 1 and 2 emission data initially to the full report. The AuASB is currently consulting with stakeholders to develop the level of assurance required for climate related disclosures and will determine how assurance requirements will be phased in.

What your next steps should be

  • Familiarise yourself with the content of the proposed standards and seek clarification on how you will be impacted
  • Provide feedback to the AASB and Treasury regarding the content of the exposure draft. Consultation is open until the 9 February 2024.

How SW can help

Our team of audit and assurance experts are fully informed of the requirements of the sustainability accounting standards and can assist with providing guidance for your business, as well as keeping you abreast of developments from an Australian reporting context.

Reach out to your SW contacts or the key contacts here for a conversation.


Jimmy Cao

Return to Insights