Legislation to mandate sustainability reporting received Royal Assent on 17 September 2024 in relation to the introduction of standardised internationally aligned reporting requirements in relation to climate sustainability reporting.
The applicable standards are:
- AASB S1 – General Requirements for Disclosure of Sustainability-related Financial Information; and
- AASB S2 – Climate-related Disclosures.
These standards require disclosures (both qualitative and quantitative) in relation to:
- Governance – the governance processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities;
- Strategy – the approach for addressing sustainability-related risks and opportunities that could affect the entity’s business model and strategy over the short, medium and long term;
- Risk Management – the processes the entity used to identify, assess and manage sustainability-related risks; and
- Metrics and Targets – information used to assess, manage and monitor the entity’s performance in relation to sustainability-related risks and opportunities over time.
The above information will need to be disclosed in a company’s financial report and this information be subjected to audit or review.
The timing and scope of which company’s are required to prepare sustainability reports are summarised in the below table:
| A company and its controlled entities exceeding 2 of the 3 criteria | |||
|---|---|---|---|
| First Annual Reporting Period on or After | Consolidated Revenue | Consolidated Gross Assets | Full Time Equivalent Employees |
| 1 January 2025 (Group 1) | $500 million | $1 billion | 500 |
| 1 July 2026 (Group 2) | $200 million | $500 million | 250 |
| 1 July 2027 (Group 3) | $50 million | $25 million | 100 |
National Greenhouse and Energy Reporting reporters and Registerable Superannuation Entities, Registered Schemes and Retail CCIVs with assets over $5 billion will also be required to report in accordance with these standards.
The following table compares when various aspects of sustainability reporting are subject to assurance, and when for a Group 3 company with a 30 June year end:
| First year | Second year | Third year | Fourth year | |
|---|---|---|---|---|
| Sustainability Disclosures | 30 June 2028 | 30 June 2029 | 30 June 2030 | 30 June 2031 onwards |
| Governance | Limited | Limited | Limited | Reasonable |
| Strategy - Risks & opportunities | Limited | Limited | Limited | Reasonable |
| Climate resilience/scenario analysis | None | Limited | Limited | Reasonable |
| Transition plans | None | Limited | Limited | Reasonable |
| Risk management | None | Limited | Limited | Reasonable |
| Scope 1 and Scope 2 emissions | Limited | Reasonable | Reasonable | Reasonable |
| Scope 3 emissions | N/A (transition exemption defers disclosure to second year) | Limited | Limited | Reasonable |
| Climate-related metrics and targets | None | Limited | Limited | Reasonable |
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About the Author
Daniel Dalla
Partner, Audit and Assurance | InCorp Advisory
