Australia has crossed a threshold that many businesses didn’t see coming fast enough. As per Australia’s new ESG mandates, climate risk is now a financial disclosure matter, not a sustainability talking point, not a values statement, and not something you can delegate to a junior ESG coordinator. As of January 2025, the Australian government has made it law: large and mid-sized companies must formally report on their climate-related risks, opportunities, and emissions under the new Australian Sustainability Reporting Standards (ASRS).
The implications go well beyond paperwork.
Boards that fail to embed climate risk into their financial thinking now carry legal exposure. CFOs who can’t produce audit-ready emissions data are operating behind the curve. And businesses that treat this as a compliance checkbox are missing the bigger picture — because the investors, partners, and customers you want to impress are already reading these disclosures.
This isn’t a future obligation. For Group 1 companies, it’s already here. For everyone else, the clock is running. This guide breaks down exactly what the new mandates require, who they apply to, and (more importantly) how to turn this regulatory shift into a genuine competitive advantage.
Australia has introduced mandatory climate-related financial reporting through the Australian Sustainability Reporting Standards (ASRS), issued by the Australian Accounting Standards Board (AASB). These are based on two key standards:
AASB S1: General sustainability-related financial disclosures
AASB S2: Climate-related disclosures (risks, opportunities, and greenhouse gas emissions)
In simple terms: if your company is above a certain size, you must now report how climate change affects your business — and back it up with data.
The rollout is staged across three groups:
Even if you’re in Group 2 or 3, now is the time to start preparing. Building the right data systems and internal processes takes time — and the earlier you start, the smoother the transition. For a broader picture of how mandatory reporting is rolling out in comparable markets, it’s worth reviewing Hong Kong’s ESG reporting requirements and what lessons apply.
Under AASB S1 and S2, companies are expected to report on climate-related risks and opportunities that could affect the business financially, greenhouse gas (GHG) emissions including Scope 1, Scope 2, and eventually Scope 3, governance over how your board oversees climate-related risks, strategy covering how climate risks are built into your business planning, risk management processes for identifying and managing climate risks, and metrics and targets, the numbers you’re tracking and goals you’ve set.
This is not just a sustainability exercise. It’s financial disclosure — meaning it sits alongside your annual financial reports and carries the same level of scrutiny. Companies that have already built experience with global ESG frameworks like ISSB and CSRD will find much of this familiar territory.
On March 31, 2025, the Australian Securities and Investments Commission (ASIC) published Regulatory Guide 280 – a practical guidance document to help companies prepare their sustainability reports under the new regime.
RG 280 clarifies how companies should structure their sustainability reports, what “reasonable assurance” looks like for emissions data, how directors and officers should think about their liability for sustainability disclosures, and transition relief provisions available for early-stage reporters.
This guide is especially important for boards and CFOs who need to understand their legal obligations. Getting disclosures wrong isn’t just a reputational risk — it can carry legal consequences under ASIC’s enforcement remit. This is precisely why ESG assurance is becoming a board-level priority, not just a back-office function.
Yes, these are legal requirements. But forward-thinking businesses are seeing this as more than just a box-ticking exercise.
Investor pressure is real. Institutional investors (both domestic and international) are increasingly demanding transparent ESG data before allocating capital. Companies that report clearly and credibly will have an edge in accessing funding. The link between ESG performance and investment access is explored in detail in our piece on ESG and finance.
Supply chain expectations are shifting. If you supply to larger companies already in Group 1, expect them to start asking questions about your emissions data — particularly as Scope 3 reporting becomes the norm. Understanding ESG’s role in supply chain management will help you anticipate what your clients will require.
It reveals actual business risk. Climate-related financial risks, from physical damage to assets, to regulatory changes affecting operations, are business risks. Mapping them out properly helps leadership make better decisions. It builds long-term trust. Transparent reporting builds credibility with customers, employees, and partners. In an era where greenwashing is under intense scrutiny, genuine disclosure stands out.
Many businesses, even large ones, are finding this harder than expected. Data gaps are one of the most common issues, most companies don’t have clean, audit-ready emissions data across their operations and supply chains. Scope 3 complexity is another hurdle, as measuring indirect emissions from suppliers, logistics, and customer use is the hardest part of any carbon accounting exercise.
Lack of internal expertise is also a widespread challenge, since ESG and climate reporting requires skills that sit across finance, operations, and sustainability and most teams aren’t structured for it yet. Read about how to choose the right ESG consultant to address this gap effectively. Technology gaps round out the picture spreadsheets won’t cut it for ongoing compliance. Our overview of ESG and sustainability powered by AI and big data covers what modern reporting infrastructure looks like.
Understanding your carbon footprint and emissions baseline is a practical first step before tackling the full reporting framework.
Whether you’re in Group 1 already or preparing for Group 2 or 3, here’s a practical action plan. Start by finding out which group you fall into by checking your employee count, revenue, and assets against the thresholds. Then conduct a gap analysis, where are you today versus what the standards require? Begin tracking emissions, particularly Scope 1 and 2. Energy audits are one of the fastest ways to establish an accurate emissions baseline while uncovering cost savings at the same time.
Engage your board and finance team early, this is a financial disclosure, not just a sustainability report, and leadership needs to be involved. Review ASIC’s Regulatory Guide 280, especially if you’re a director or CFO, to understand your obligations and the relief provisions available. Finally, build toward assurance readiness, over time, your emissions data will need to be independently verified, so start building the internal controls that make that possible.
Australia’s new ESG mandates represent one of the most significant shifts in corporate reporting requirements in a generation. They’re not going away, and the scope of who’s affected will only grow over the next few years. The businesses that treat this as a genuine strategic priority, rather than a compliance burden, will be better positioned to attract investment, manage risk, and build lasting credibility. For context on how similar shifts are playing out across the APAC region, see our analysis of Singapore’s climate reporting requirements.
If you want to understand where your business stands and how to build a credible sustainability strategy, the time to start is now.
