Australia’s mandatory climate-related financial disclosure regime is entering its second phase. Group 2 entities begin reporting for financial years starting on or after July 1, 2026, using the climate requirements in AASB S2.
The regime is part of the Corporations Act annual-reporting framework. In-scope entities prepare a sustainability report containing the climate statements, notes, and directors’ declaration, and lodge it with their annual reporting package.
Who enters Group 2 in 2026
A company or registered scheme can enter Group 2 when it is required to prepare and lodge an annual report and meets at least two of these thresholds:
- Consolidated revenue of A$200 million or more.
- Consolidated gross assets of A$500 million or more.
- 250 or more employees.
Group 2 also includes other entities captured through National Greenhouse and Energy Reporting obligations and certain asset owners, including registered schemes, registrable superannuation entities, and retail corporate collective investment vehicles with assets under management of A$5 billion or more.
The detailed Corporations Act tests include conditions and definitions that cannot be reduced to a three-line threshold check. Preserve a written applicability assessment covering the reporting entity, consolidated group, reporting period, financial measures, employee count, NGER status, and any asset-owner test.
Group 1 and Group 3 complete the phase-in
Group 1 began for financial years starting on or after January 1, 2025. Its general size thresholds are at least two of A$500 million revenue, A$1 billion gross assets, and 500 employees, alongside the applicable NGER threshold.
Group 3 begins for financial years starting on or after July 1, 2027. Its general size thresholds are at least two of A$50 million revenue, A$25 million gross assets, and 100 employees.
An entity should reassess scope for every reporting year. Growth, transactions, group restructuring, employee changes, NGER status, or assets under management can change the result.
What AASB S2 requires
AASB S2 is based on IFRS S2 and requires disclosure of material information about climate-related risks and opportunities across governance, strategy, risk management, and metrics and targets.
The work extends beyond Scope 1, Scope 2, and Scope 3 emissions. It includes current and anticipated financial effects, climate resilience and scenario analysis, transition-related information, internal carbon prices where used, remuneration links, and industry-based metrics.
Australia issued AASB S1 as a voluntary general sustainability standard. An entity subject to the statutory climate regime can apply AASB S2 without voluntarily adopting AASB S1. Teams should use the Australian text and ASIC guidance rather than substituting an overseas IFRS S1/S2 checklist.
Assurance changes the implementation sequence
Climate reporting is subject to phased assurance under Australian requirements. The sustainability report is also covered by directors’ responsibilities and regulatory oversight.
Work backward from external assurance and board approval. Establish evidence standards before collecting the year’s data, identify control owners, and make corrections through a visible change process. Use an assurance-readiness review to test whether a reviewer can reproduce material metrics and trace management judgements.
A Group 2 implementation checklist
- Obtain board-approved applicability and reporting-boundary memos.
- Map AASB S2 requirements to data, narrative owners, and evidence.
- Reconcile facilities, meters, fleets, refrigerants, and other sources to the consolidated group.
- Approve Scope 1, Scope 2, and Scope 3 methods, estimates, and exclusions.
- Complete scenario analysis with documented assumptions and review.
- Connect material climate matters to strategy, risk, forecasts, and financial reporting.
- Run a dry close and draft sustainability report before year-end.
- Schedule audit committee, board, assurance-provider, and lodgement milestones.
Scope 3 is often the longest data workstream. Start with category screening and method selection, then improve from spend to activity and supplier-specific information where the decision value justifies it.
Information in this article was verified on August 9, 2026. Australian requirements are detailed and entity-specific. This overview is general information, not legal advice.
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