From 1 January 2025, certain entities that lodge financial reports with the Australian Securities and Investments Commission (ASIC) under Chapter 2M of the Corporations Act 2001 are required to include an audited sustainability report as part of their annual reports.
These entities include:
- Large entities: Entities that meet two of the relevant thresholds for consolidated revenue, asset value, or number of employees.
- NGER reporters: Entities with reporting obligations under the National Greenhouse and Energy Reporting (NGER) scheme.
- Asset owners: Registrable superannuation entities (RSEs), registered schemes, and retail corporate collective investment vehicles (CCIVs) that meet relevant thresholds.
A staggered approach across three groups has been introduced to phase in the requirement.
Table 1
Large Entities meeting at least two of three criteria below: | Group 1 | Group 2 | Group 3 |
1) Revenue | > $500 million | > $200 million | > $50 million |
2) Consolidated Gross Assets | > $1 billion | > $500 million | > $25 million |
3) Employees | > 500 | > 250 | > 100 |
Annual Reporting periods from | 1 January 2025 (Years ending on and after 31 December 2025) | 1 July 2026 (Years ending on and after 30 June 2027) | 1 July 2027 (Years ending on and after 30 June 2028) |
Table 2
Other reporting categories: | Group 1 | Group 2 | Group 3 |
National Greenhouse and Energy Reporting Act (NGER) entities* | Above NGER publication threshold (i.e 50,000 tonnes of CO2 equivalent) | All other NGER reporters | N/A |
Asset owners who are registered schemes, registrable superannuation entities or retail CCIV | N/A | Assets under management > $5 billion | N/A |
Annual Reporting periods from | 1 January 2025 (Years ending on and after 31 December 2025) | 1 July 2026 (Years ending on and after 30 June 2027) | 1 July 2027 (Years ending on and after 30 June 2028) |
*An entity is an NGER reporter if it is a controlling corporation registered or required to be registered under s12(1) of the National Greenhouse and Energy Reporting Act 2207 (NGER Act).
Exempt entities
The following reporting entities are not required to prepare a sustainability report:
- small or medium size entities (those whose criteria fall below that set out in Table 1 above) and are not an NGER
- not for profit entities registered with the Australian Charities and Not-for-profits Commission (ACNC)
What is required in the sustainability report?
The sustainability report for a financial year is required to include:
- the climate statements for the year;
- any notes to the climate statements; and
- the Directors’ declaration about the statements and notes.
Climate statements must comply with sustainability standards set by the Australian Accounting Standards Board (AASB) SB2 – climate related disclosures under the Corporations Act 2001. These standards require entities to disclose the following for each financial year:
- Material climate-related financial risks and opportunities.
- Metrics and targets related to climate, including Scope 1, 2, and 3 greenhouse gas emissions.
- Information about governance, strategy, and risk management concerning these risks, opportunities and targets.
Entities must also perform a scenario analysis to assess climate resilience under two future scenarios: a 1.5°C temperature increase, and a temperature increase of 2.5°C or higher, as outlined in the Climate Change Act 2022.
Climate statements for entities with no material climate risks or opportunities
Group 3 entities, which do not meet other reporting categories, are exempt from providing a detailed sustainability report. However, they must still submit a climate statement that includes:
- Confirmation that there are no material climate-related financial risks or opportunities for the financial year.
- An explanation of how and why the exemption applies to the entity for that year.
For more information specific to your climate reporting contact your HCQ advisor.
