Mandatory climate-related sustainability reporting In Australia
In September 2024, the Australian Government legislated mandatory climate reporting for companies that meet certain size thresholds. From January 2025, mandatory sustainability reporting in Australia will reshape how businesses identify, manage, and disclose climate related financial information. Under new Australian sustainability reporting standards, companies will need to publish clear, structured climate-related disclosures to meet both national and global reporting requirements. Far from a box-ticking exercise, this is a strategic opportunity to future-proof operations in an increasingly environmental sustainability-focused economy.
This is driven by Australia’s commitments under the Paris Agreement and the Australian Government’s Climate Change Act 2022, which outlines Australia’s commitment to reduce greenhouse gas (‘GHG’) emissions by 43% by 2030 and reach net zero emissions by 2050.
TL;DR
From January 2025, large Australian businesses must begin mandatory sustainability reporting, disclosing climate-related financial information, emissions, and governance practices in line with new Australian sustainability reporting standards (AASB S2). This legislative shift, driven by Australia’s Climate Change Act 2022 and Paris Agreement commitments, requires entities meeting thresholds for revenue, assets, or staff to report on:
- Climate risks and opportunities
- Scenario analysis
- Greenhouse gas emissions (Scope 1 and 2, then Scope 3)
- Risk management and governance
- Financial impacts of climate change
Affected entities include large proprietary companies, financial institutions, and registrable super funds, with a phased rollout from 2025 to 2027. Supply chain partners—especially 3PLs—must also support compliance by improving data transparency, emissions tracking, and sustainable practices.
Early preparation through gap analysis, robust data systems, and sustainability assurance engagements will be critical. This is not just regulatory—it’s a strategic opportunity to reduce risk, build ESG trust, and future-proof operations.
What Is Mandatory Sustainability Reporting in Australia?
Mandatory sustainability reporting refers to a legal obligation for certain entities to disclose their sustainability related financial information publicly. This includes:
- Climate related financial disclosures
- Climate related risks and opportunities
- Emissions data across the value chain
- Governance and risk management processes
These disclosures are required under the Australian sustainability reporting framework, which aligns with the International Sustainability Standards Board (ISSB) and is formalised locally through AASB S2, a standard developed by the Australian Accounting Standards Board (AASB).
Why Is Sustainability Reporting Becoming Mandatory?
This shift is part of the Australian Government’s commitment to the Climate Change Act 2022. It targets a 43% emissions reduction by 2030 and net zero by 2050. The mandatory climate reporting requirements ensure businesses disclose climate related financial impacts as part of their financial reports, enabling investors, regulators, and stakeholders to assess long-term risks and opportunities.
Entities Required to Report
The entities required to comply include:
- Large proprietary companies
- Financial institutions
- Registrable superannuation entities
- Retail corporate collective investment vehicles
Entities must meet specific sustainability reporting thresholds based on:
- Consolidated revenue
- Consolidated gross assets
- Number of employees
The mandatory rollout follows this timeline:
- Group 1: For financial years beginning on or after 1 January 2025
- Group 2: From 1 July 2026
- Group 3: From 1 July 2027
These annual reporting periods allow time for gap analysis and compliance readiness across reporting entities.
Group 1 companies must report for financial years beginning on or after 1 January 2025; Group 2 companies must report for financial years commencing on or after 1 July 2026; and Group 3 companies must report for financial years commencing on or after 1 July 2027.
What Must Be Disclosed in a Sustainability Report?
Organisations must prepare a sustainability report that meets new sustainability reporting requirements, including:
- Climate Related Risks and Opportunities
Disclose short-, medium-, and long-term sustainability related risks, including physical threats (e.g. extreme weather) and transitional risks like policy changes and reputational damage. - Climate Scenario Analysis
Apply scenario analysis to assess strategic resilience under various climate related financial futures. This helps quantify exposure in key areas like supply chain disruption or cost structures. - Governance and Risk Management
Explain how climate related risks are governed and managed. This includes board oversight, executive accountability, and integration into enterprise-wide risk management systems. - Greenhouse Gas Emissions and Energy Use
Disclose Scope 1 and Scope 2 greenhouse gas emissions in the first sustainability report, with Scope 3 (e.g. value chain emissions) phased in later. Energy reporting will also become critical. - Financial Impacts
Report how climate affects the entity’s cash flows, strategy, and financial market infrastructure.
Role of the AASB and Assurance Requirements
The Australian Accounting Standards Board (AASB) has localised global ISSB guidance into AASB S2, adapting it to the Australian legal and economic context. The Accounting Standards Board AASB ensures compliance through:
- Clear standards for climate related disclosures
- Local interpretation of related financial information
- Foundations for assurance requirements and auditability
Additional support from the Assurance Standards Board may emerge to clarify verification expectations.
Impacts on Supply Chain & Controlled Entities
While obligations centre on large firms, controlled entities, subsidiaries, and supply chain partners play a vital role in supporting accurate disclosures. For entities reporting, collecting sustainability related financial information from logistics, warehousing, and manufacturing partners is critical.
Controlled entities meeting thresholds may be directly affected, especially in carbon-intensive sectors.
How Supply Chain Operators and 3PLs Can Help
If you're part of a supply chain—especially in logistics or warehousing—your actions contribute directly to your clients’ compliance:
- Optimise Energy Use – Retrofit lighting, install solar, improve HVAC
- Fleet Transition – Shift to EVs or hybrids to reduce transport emissions
- Sustainable Packaging – Help reduce waste and Scope 3 emissions
- Inventory Efficiency – Use analytics to reduce overproduction
Support clients as they prepare sustainability reports by offering reliable, transparent data.
How to Prepare for Mandatory Reporting
To ensure readiness for mandatory sustainability reporting, businesses should:
Step 1: Conduct a Gap Analysis
Assess current disclosure practices and related risks and opportunities across your operations and value chain.
Step 2: Build Robust Data Systems
Develop systems to gather and manage high-quality sustainability related financial information and emission data.
Step 3: Engage Internal & External Stakeholders
Assign reporting responsibilities and engage suppliers and internal teams early.
Step 4: Pursue Sustainability Assurance Engagements
Use sustainability assurance engagements to validate your report and enhance stakeholder confidence.
Legal and Regulatory Obligations
The Treasury Laws Amendment integrates mandatory climate disclosures into the Corporations Act, creating a statutory basis for:
- Issuing climate related financial disclosures in financial year reports
- Complying with reporting obligations under mandatory standard disclosure
- Clarifying requirements for annual reporting periods starting from 2025 onward
Why This Matters for Australian Business
Proactive compliance with Australian sustainability reporting standards offers more than risk mitigation:
- Resilience: Mitigate climate disruptions before they occur
- Market Advantage: Meet ESG investor criteria
- Operational Gains: Reduce energy and waste
- Reputation Building: Show leadership through transparency
Future Sustainability Disclosure Standards
The government’s “climate first, not only” approach signals future expansions to sustainability disclosure standards—including biodiversity, water usage, and circular economy indicators. Organisations should prepare now for more advanced disclosure of sustainability related issues across all ESG domains.
A Strategic Imperative
Mandatory sustainability reporting isn’t just about regulatory requirements—it’s about setting your business up for a more resilient, sustainable future.
Reach out to the uTenant Supply Chain Solutions team today. Whether you’re seeking a compliant 3PL partner, reviewing emissions data, or preparing your first sustainability report, we’re here to help.
Published: 7 October 2024
Updated: 23 June 2025