ESG Reporting Requirements in Australia: ASRS, AASB S1 & S2 Explained

Australia has enacted mandatory climate-related financial disclosures for large entities, making it one of the first countries in the Asia-Pacific region to move from voluntary to compulsory sustainability reporting at scale. The regime — established through the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 — took effect for the largest entities from 1 January 2025 and will extend to mid-sized and smaller entities in phases through to 2027.

The Australian requirements are closely aligned with the ISSB's IFRS Sustainability Disclosure Standards (IFRS S1 and S2), with local adaptations from the Australian Accounting Standards Board (AASB). For companies already reporting under TCFD, the transition is more straightforward — the Australian standards build directly on TCFD's four-pillar framework.

Who Must Report — The Three-Group Phased Rollout

The Australian regime applies to large entities — broadly, companies above defined size thresholds — on a phased schedule. The three groups are:

• Group 1 — from 1 January 2025: entities that meet two of three criteria: consolidated revenue ≥ A$500m; consolidated gross assets ≥ A$1b; 500+ employees. Financial years commencing on or after 1 January 2025 are in scope; the first reports are expected by mid-to-late 2026.
• Group 2 — from 1 July 2026: entities meeting two of: consolidated revenue ≥ A$200m; consolidated gross assets ≥ A$500m; 250+ employees. Also applies to asset owners (superannuation funds, managed investment schemes) with ≥ A$5b assets under management.
• Group 3 — from 1 July 2027: entities meeting two of: consolidated revenue ≥ A$50m; consolidated gross assets ≥ A$25m; 100+ employees. This group captures most listed companies not already covered by Groups 1 and 2.

Foreign companies registered in Australia that meet the thresholds are also in scope. The regime applies to companies regulated under the Corporations Act 2001 — it is not limited to ASX-listed companies, though the ASX Listing Rules have separate continuous disclosure obligations that interact with these requirements.

What Must Be Disclosed

The Australian standards — AASB S1 (General Requirements) and AASB S2 (Climate-related Disclosures) — follow the ISSB structure and require disclosure across four pillars:

• Governance: board and management oversight of climate-related risks and opportunities. Who is responsible? What is the reporting cadence? What expertise does the board have?
• Strategy: how climate-related risks and opportunities affect the entity's business model, strategy, and financial planning. This includes scenario analysis — entities must assess climate resilience under at least two scenarios, one of which must be consistent with limiting warming to 1.5°C.
• Risk management: processes for identifying, assessing, prioritising, and monitoring climate-related risks and opportunities, and whether these processes are integrated into the entity's overall risk management framework.
• Metrics and targets: quantitative data on climate-related performance. The AASB S2 requirements include Scope 1, Scope 2, and material Scope 3 greenhouse gas emissions, plus sector-specific metrics drawn from SASB Industry Standards.

The Scope 3 requirement is phased: Groups 1 and 2 entities must disclose Scope 3 emissions where material, with a 'relief period' allowing a qualitative explanation in the first year if quantitative data is not yet available. Group 3 entities have additional transition provisions. The expectation is that quantitative Scope 3 data will be required for all in-scope entities within two to three years of their commencement date.

Assurance Requirements

Third-party assurance is mandatory under the Australian regime, phased in according to the assurance standard required:

• Year 1 (all groups, first reporting year): no assurance required — entities are expected to use the first year to build data processes
• Year 2: limited assurance required on Scope 1 and Scope 2 emissions disclosures
• Year 3 and beyond: limited assurance required on all climate-related disclosures; a pathway to reasonable assurance is under consideration by AUASB (Auditing and Assurance Standards Board)

The assurance requirement creates an immediate data management imperative. Organisations that enter their first assurance engagement without auditable source documentation, calculation logs, and version-controlled methodology will face qualified opinions and significant remediation cost. The data infrastructure must be built before the assurance engagement, not after.

Interaction with Existing Australian Reporting Requirements

Several existing frameworks interact with the new mandatory regime:

• NGER (National Greenhouse and Energy Reporting): Australian companies above the NGER threshold already report GHG emissions to the Clean Energy Regulator annually. NGER data — which uses Australian-specific emission factors and methodologies — can be used as a primary source for Scope 1 and 2 disclosures under AASB S2, though methodology reconciliation is required since NGER and GHG Protocol use different scope boundaries and emission factors.
• ASX Listing Rules: continuous disclosure obligations may require listed companies to disclose material climate risks as they emerge, independently of the annual sustainability report cycle.
• Modern Slavery Act 2018: mandatory reporting on modern slavery risks in supply chains applies to entities with annual consolidated revenue ≥ A$100m. This feeds into the AASB S2 supply chain disclosure requirements.

Practical Steps for In-Scope Australian Entities

For entities in Group 1 (already in scope from 1 January 2025) or Group 2 (in scope from 1 July 2026), the immediate priorities are:

• Confirm your group classification — review consolidated revenue, assets, and employee numbers against the threshold criteria; multinational groups need to assess the Australian consolidated entity separately
• Conduct a climate risk and opportunity identification — identify physical and transition risks material to your operations and value chain under at least a 1.5°C scenario
• Baseline your GHG emissions — Scope 1 and 2 data with NGER reconciliation where applicable; begin Scope 3 data collection programme for material categories
• Map your governance structure — document board and management oversight of climate risk, including terms of reference, reporting cadence, and expertise
• Assess data system readiness — the audit trail requirements for assurance mean that data collected via spreadsheets and email is unlikely to meet the standard by year 2; begin platform evaluation now

For entities in Group 3, the 2027 start date provides a longer runway but limited additional time to build data infrastructure from scratch. The experience of Groups 1 and 2 — and the assurance findings they generate — will shape the bar that Group 3 entities are expected to meet.

See our guide to corporate GHG emissions tracking for the data collection approach that underpins AASB S2 disclosures, and ESG reporting software for platforms purpose-built for mandatory climate disclosure.

Australia is one of a number of jurisdictions that brought mandatory climate reporting into force during 2025 and 2026. For how AASB S1 and S2 compare with the regimes in the EU, UK, US, and wider Asia-Pacific, see our overview of global ESG regulations and reporting requirements.