WATCH NOW: Maddocks ESG Compliance Webinar - November 2025

Alanna Mitchell (Partner), Ron Smooker (Partner) and Samantha Murphy (Senior Associate) unpacked the key components of the new sustainability reporting framework and explained what legal and operational teams need to know to stay compliant.

Watch it here

ASIC has recently released additional guidance, building on Regulatory Guide 280, to assist organisations in navigating the new sustainability reporting obligations under Chapter 2M of the Corporations Act 2001 (Cth) (Corporations Act). The ASIC guidance provides practical direction on preparing Sustainability Reports, including climate-related financial disclosures, and outlines how ASIC will administer and enforce these requirements. It also offers detailed guidance on audit and assurance expectations, scenario analysis, scope 3 emissions, and the application of reporting thresholds.

With the sustainability reporting requirements commencing for Group 1 entities this year, we have brought together the key requirements and guidance in an easy-to-understand checklist. This checklist summarises the key components of the regime, outlines compliance obligations, and highlights ASIC’s latest guidance on the review and audit of Sustainability Reports.

Select a topic from the menu below to read more: 

When do you need to report
What must you disclose? 
What reporting standards apply?  
What emissions do you need to report on?
What is the emissions reporting framework? 
What are the auditing and assurance requirements?
What are the consequences of failing to comply?

✓ When do you need to report?

Reporting obligations will be phased in over three years, beginning 1 January 2025, under Chapter 2M of the Corporations Act. Entities must prepare a Sustainability Report if they are required to prepare an annual financial report under Chapter 2M and meet one of the thresholds in section 292A. For entities with a 30 June balance date, the reporting commencement dates and thresholds are: 

Group 1 Financial year commencing 1 July 2025

Entities, other than registered schemes, Registerable Superannuation Entities (RSEs) or retail Corporate Collective Investment Vehicles (CCIVs) that meet two of the following three criteria:

• Consolidated revenue of $500 million or more
• Consolidated gross assets of $1 billion or more
• 500 or more employees.

Also includes: 
Entities, other than RSEs or CCIVs, reporting under the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act) and meeting the publication threshold.

Group 2 Financial year commencing 1 July 2026

Entities that meet two of the following three criteria:

• Consolidated revenue of $200 million or more
• Consolidated gross assets of $500 million or more
• 250 or more employees.

Also includes: 

• Entities reporting under the NGER Act.
• Registered schemes, RSEs and CCIVs with $5 billion or more in assets under management.

Group 3 Financial year commencing 1 July 2027

Entities that meet two of the following three criteria:

• Consolidated revenue of $50 million or more
• Consolidated gross assets of $25 million or more
• 100 or more employees.

✓ What must you disclose? 

Entities to which the regime applies will be required to include a Sustainability Report with their annual financial reports, which must contain a climate statement prepared in accordance with section 296A of the Corporations Act. The climate statement must report on the entity’s: 

• material climate-related risks and opportunities;
• Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions;
• governance, strategy and risk management processes relating to those material climate-related risks and opportunities, including any relevant metrics or targets; and
• scenario analysis demonstrating the entity’s resilience to climate-related changes, including at least two temperature pathways (e.g. 1.5°C and well exceeding 2°C). 

Group 3 entities that determine they do not face material climate-related risks or opportunities are not required to prepare a full climate statement. Instead, they may include a short-form statement in their Sustainability Report explaining the basis for that conclusion, as permitted under section 296B of the Corporations Act. This explanation should be supported by a documented materiality assessment. 

The climate statement and broader Sustainability Report must be accompanied by a directors’ declaration. However, during the first three years of the regime, directors are only required to make a qualified declaration. This means that directors need to state that, ‘in their opinion, the entity has taken reasonable steps to ensure the sustainability report has been prepared in accordance with the Corporations Act 2001. From 2028, directors will need to make a full declaration, consistent with requirements for the financial report under section 295(4). 

✓ What reporting standards apply?  

The Sustainability Report must comply with AASB S2 – Climate-related Disclosures (AASB S2), which is mandated under Chapter 2M of the Corporations Act, and forms part of the statutory annual reporting obligations for entities that meet sustainability reporting thresholds. 

AASB S1 - General Requirements for Disclosure of Sustainability-related Financial Information is designed to complement AASB S2 and enhance transparency around sustainability-related financial risks and opportunities. 

AASB S2 sets out in detail the information required to be included in a Sustainability Report, and also provides guidance on identifying material risks and obligations and assessing an entities’ climate resilience. 

Reporting entities can also elect to apply the voluntary standard, which relates to the disclosure of broader sustainability-related risks and opportunities.   

The Sustainability Report is now the fourth mandatory report under Chapter 2M, alongside the financial report, directors’ report, and auditor’s report. ASIC will monitor compliance by reporting entities but has indicated it will take a pragmatic and proportionate approach to enforcement during the phase-in period. 

✓ What emissions do you need to report on?

The climate statement must include disclosures of Scope 1, Scope 2 and Scope 3 greenhouse gas emissions:

Scope 1 and Scope 2 emissions must be reported from the first year of reporting. 

Scope 3 emissions are not required in the first Sustainability Report but must be reported on from the second year onwards, using all reasonable and supporting information that is available to a reporting entity without undue cost or effort.

✓ What is the emissions reporting framework? 

The Standards that entities must calculate emissions using the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) for Scope 1 and Scope 2 emissions, and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) for Scope 3 emissions. 

Entities that are required to report emissions under the NGER Act may use that framework instead, where applicable. 

✓ What are the auditing and assurance requirements?

Sustainability Reports prepared under the Corporations Act are subject to mandatory assurance requirements under Division 3 of Part 2M.3, specifically section 301A. Auditors must conduct assurance engagements in accordance with: 

• ASSA 5000 General Requirements for Sustainability Assurance Engagements, issued by the Australian Auditing and Assurance Standards Board (AUASB) under section 336(1) of the Act.
• ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001, which sets out a phased implementation schedule from 1 January 2025 to 30 June 2030.  

ASIC’s published guidance this month in a FAQ confirming its approach to review and audit requirements, including: 

• Auditor appointment:
  • For entities that are companies, registrable schemes or retail CCIVs, it is not mandatory to appoint the same auditor for both the financial report and Sustainability Report
  • Only RSEs are required to appoint the same auditor for both reports.
  • In deciding whether to appoint the same or different auditors, ASIC recommends that entities consider a range of factors including the overlap between financial and sustainability disclosures, and notes that the Sustainability Report auditor must assess consistency with other information, including the financial report.
• Supervision and enforcement: ASIC will adopt a pragmatic and proportionate approach to supervision and enforcement during the phase-in period. Enforcement action is more likely where ASIC identifies serious or reckless misconduct, particularly in relation to assurance failures or misleading disclosures. 

✓ What are the consequences of failing to comply?

Climate-related disclosures made in Sustainability Reports are subject to the usual penalty provisions and obligations under the Corporations Act and the ASIC Act. This includes potential liability for misleading or deceptive conduct, false or misleading statements, and failure to comply with statutory reporting obligations.

During the phase-in period, certain protections apply to entities in relation to third party proceedings (i.e. claims brought by parties other than ASIC). These protections cover statements made in relation to:

• GHG emissions;
• Scenario analysis and transition planning; and
• Forward looking statements (for a limited time only).

These protections are intended to support good faith compliance and allow entities time to build capability, but do not extend to deliberate misconduct or reckless reporting. In its Regulatory Guide 280, ASIC has indicated that it will take a pragmatic and proportionate approach to enforcement, focusing on systematic non-compliance or serious breaches.