Mandatory climate reporting in Australia

Early climate disclosures from the first cohort of Group 1 entities have provided valuable insights into emerging market practices. 

Between February and April 2026, approximately 30 to 40 Group 1 entities with 31 December 2025 financial year-ends released audited climate statements, with most disclosures incorporated into annual reports and a smaller number published as standalone sustainability reports. 

All first-wave reporters received unmodified limited assurance opinions, with around a quarter extending assurance beyond the minimum regulatory requirements. Reporting has been led by organisations in the energy, utilities and resources sectors, which accounted for around 40% of first reporters, followed by financial services (25%), industry and infrastructure (20%), and other sectors (15%). While approaches varied, disclosure quality was generally strong, with 38% of reports providing highly detailed information, 29% offering moderate levels of detail, and 33% focusing primarily on compliance with mandatory requirements.
 

While first-year reporters benefit from transitional relief from Scope 3 emissions disclosure requirements, which cover indirect emissions arising across the organisation’s supply chain and broader value chain, Scope 3 becomes mandatory from the second year of reporting. 

As a result, many organisations are already focusing on supplier engagement, data collection processes and estimation methodologies to support future disclosures.

This indicates that companies not yet subject to mandatory reporting will likely be affected as well, and they will need to start measuring their carbon footprint to align with these wider supply chain requirements. Given the complexity and time required to collect the necessary data, companies are advised to have at least two years of data, with the second year offering an opportunity to address any gaps. This means companies that delay data collection until the mandatory reporting year will be at a disadvantage. A recommended timeline has been outlined to support companies in preparing for these requirements.

Under the Corporations Act 2001, directors must exercise due care, diligence, and skill in overseeing company operations, which includes understanding and managing risks, such as those related to climate change. 

The legislation includes a modified liability framework during the initial three years of the reporting regime for certain sustainability disclosures, including aspects of forward-looking climate information. Decarbonisation and emissions reduction targets are becoming increasingly important as companies face both reporting requirements and market pressure, with many using these targets as a signal of maturity and relevance to their stakeholders.

ASIC continues to identify greenwashing as an enforcement priority. 

During the 15-month period to 30 June 2024, ASIC undertook 47 regulatory interventions, including the commencement of two Federal Court proceedings and over $123,000 in infringement notice payments. In 2024-25, ASIC also reviewed sustainability-related representations made by companies and superannuation trustees, leading 15 companies and four superannuation trustees to remove, retract, or revise sustainability statements in their public disclosures, websites, and promotional materials to reduce greenwashing risk.

Australia is also seeing rising regulatory pressure on emissions reduction pathways. 

The updated safeguard mechanism requires large emitters to reduce emissions by 4.9% annually until 2030 to meet national targets. This is part of the government's broader strategy to meet its national emissions reduction target. The mechanism aims to ensure that the country's largest carbon emitters contribute significantly to the overall reduction of greenhouse gas emissions, aligning with Australia's climate goals and helping to transition toward a low-carbon economy.

Data from DCCEEW (National Greenhouse Gas Inventory Quarterly Update: March 2026 - DCCEEW ) shows emissions for the year until March 2026 have decreased 1.6% compared with previous year and are 25.0% below 2005 levels (Australia’s baseline). 

Since January 2025, Australia's mandatory climate-related financial reporting regime has required Group 1 organisations to disclose climate risks, governance, strategy, emissions metrics and targets as part of their annual reporting. As a result, climate-related disclosures continue to increase, providing investors, regulators and other stakeholders with greater visibility into how organisations are managing climate-related risks and opportunities.

Achieving net zero will look different across industries, with each sector facing unique regulatory requirements, decarbonisation challenges and transition opportunities. As reporting expectations continue to evolve and stakeholder scrutiny increases, organisations are being expected to demonstrate not only emissions reduction targets, but also credible transition plans that reflect the realities of their operating environment. To help businesses understand the implications for their industry, RSM has developed a series of insights on Australia's net zero transition across key sectors. Explore our Australia's net zero sector plans to learn more about the sector-specific risks, opportunities and pathways to net zero.

RSM continues to recommend that companies wanting to disclose green credentials and net zero targets undertake a robust assessment to ensure that targets are realistic and achievable.

The Australian Institute of Company Directors (AICD) Climate risk and the adaptation opportunity for boards | AICD highlighted that, beyond the regulatory implications of climate action, adaptation is  emerging as a critical governance priority for boards as organisations begin reporting under Australia's mandatory climate disclosure regime. 

Early disclosures show that while many organisations have developed relatively mature emissions reduction and transition strategies, fewer have established clear adaptation strategies, quantified adaptation targets, or disclosed planned adaptation investments. The AICD notes that boards are increasingly expected to consider not only transition risks but also the physical impacts of climate change, including extreme weather events, operational disruptions, supply chain vulnerabilities and insurance challenges. 
As climate reporting matures, organisations are expected to place greater emphasis on resilience, adaptation planning and long-term value protection, alongside traditional emissions reduction initiatives.

The progression of ESG and climate reporting in Australia is evolving rapidly in response to increasing regulatory pressures, investor demand, and public scrutiny.

As the Australian government, in addition to local and global stakeholders, continues to emphasise climate action and sustainable practices, companies will face stricter reporting requirements, particularly around carbon emissions, climate risks, and social impacts. This evolution is seeing a shift towards greater transparency, with organisations expected to disclose more granular data on their ESG performance and alignment to climate-related risk reporting.