Australian Sustainability Reporting Standards (ASRS) in 2026: What Businesses Need to Know

Australia has entered a new era of sustainability and climate reporting.

From 2025 onwards, many Australian organisations are legally required to disclose climate related financial information as part of their annual reporting. These new requirements are formalised through the Australian Sustainability Reporting Standards (ASRS), which are aligned with global sustainability disclosure frameworks.

For businesses, this represents a fundamental shift. Sustainability and climate reporting in Australia is no longer a voluntary ESG exercise or a marketing led sustainability report. It is now part of the financial reporting framework, subject to governance, controls, and increasing regulatory scrutiny.

This article explains what the Australian Sustainability Reporting Standards are in 2026, how IFRS S1 and IFRS S2 relate to the Australian standards (AASB S1 and AASB S2), who must report and when, what needs to be disclosed, and how businesses can practically prepare.

‍

What Are the Australian Sustainability Reporting Standards (ASRS)?

The Australian Sustainability Reporting Standards (ASRS) are a set of standards governing how Australian entities disclose sustainability and climate-related financial information.

They are issued by the Australian Accounting Standards Board and form part of Australia’s broader financial reporting framework.

The ASRS are designed to:

• Provide consistent, comparable and decision useful sustainability information to investors
  
• Align Australian reporting with global sustainability standards
  
• Support the Australian Government’s move to mandatory climate related financial disclosures

The current ASRS consist of two standards:

• AASB S1 — General Requirements for Disclosure of Sustainability-related Financial Information (voluntary)
  
• AASB S2 — Climate-related Disclosures (mandatory for many entities)
  

The first phase of ASRS focuses on climate-related financial disclosures, with the expectation that additional ESG topics (such as biodiversity, nature and social factors) may be incorporated over time.

‍

IFRS S1 and IFRS S2: The International Standards

The Australian standards are directly aligned to global frameworks developed by the International Sustainability Standards Board under the IFRS Foundation.

IFRS S1 — General Sustainability-related Financial Information

IFRS S1 sets out high-level principles for disclosing sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s:

• Cash flows
  
• Access to finance
  
• Cost of capital
  over the short, medium or long term.
  

It provides the conceptual foundation for sustainability reporting, similar to how accounting standards underpin financial statements.

IFRS S2 — Climate-related Disclosures

IFRS S2 is a detailed climate-specific standard. It requires disclosures about:

• Climate-related risks and opportunities
  
• Governance and oversight
  
• Strategy and climate resilience
  
• Risk management processes
  
• Metrics, targets and greenhouse gas emissions
  

These international standards form the global baseline for sustainability and climate reporting, enabling comparability across jurisdictions and capital markets.

‍

AASB S1 and AASB S2: The Australian Standards

Australia has adopted the IFRS sustainability standards through locally issued equivalents.

AASB S1 — Sustainability-related Financial Information (Voluntary)

AASB S1 is the Australian equivalent of IFRS S1. It:

• Sets general principles for sustainability-related financial disclosures
  
• Covers risks and opportunities beyond climate
  
• Is voluntary at this stage under Australian law
  
  

AASB S1 provides the framework for broader ESG reporting but is not yet mandated.

AASB S2 — Climate-related Disclosures (Mandatory)

AASB S2 is the Australian equivalent of IFRS S2 and is the mandatory standard for climate-related financial disclosures for many entities.

AASB S2:

• Requires climate-related disclosures aligned to investor decision-making
  
• Incorporates relevant elements of AASB S1 where needed
  
• Integrates the core structure of the TCFD framework
  
• Is enforceable through Australian legislation
  
  

In practice:

• AASB S1 = voluntary sustainability framework
  
• AASB S2 = mandatory climate reporting standard
  
  

ESG and Sustainability Reporting Requirements in Australia

Sustainability reporting in Australia now includes mandatory climate-related financial disclosure under the Corporations Act 2001.

These obligations are administered and monitored by ASIC, and sit alongside traditional financial reporting obligations.

This means:

• Climate reporting is no longer separate from financial reporting
  
• Boards are accountable for climate disclosures
  
• Processes, controls and governance matter
  
  

While “ESG reporting” is often used as a broad term, the ASRS framework takes a climate-first approach, with climate risk treated as financially material. Over time, sustainability reporting requirements in Australia are expected to expand beyond climate to other ESG topics.

‍

Who Is Required to Report and When It Applies

Who Must Report

Entities that must prepare annual financial reports under Chapter 2M of the Corporations Act and meet specified thresholds are required to prepare a Sustainability Report that includes climate-related financial disclosures.

This includes:

• Large listed companies
  
• Large proprietary companies
  
• Certain asset owners and financial institutions
  
• National Greenhouse and Energy Reporting (NGER) reporters
  
  

When It Applies

Mandatory reporting is being phased in:

• Group 1 entities — reporting periods beginning on or after 1 January 2025
  
• Group 2 entities — reporting periods beginning on or after 1 July 2026
  
• Group 3 entities — reporting periods beginning on or after 1 July 2027
  
  

Entities may also choose to apply the standards voluntarily earlier, but must comply fully if they do so.

What Form the Reporting Takes

Climate disclosures must be included in a Sustainability Report that forms part of the entity’s general purpose financial reporting.

Under AASB S2, disclosures must cover four core areas:

Governance

How the board and management oversee climate-related risks and opportunities.

Strategy

How climate risks and opportunities affect the business model, strategy and financial planning, including climate resilience and scenario analysis.

Risk Management

How climate risks are identified, assessed, prioritised and integrated into enterprise risk management.

Metrics and Targets

Quantitative and qualitative metrics used to manage climate risk, including:

• Scope 1, Scope 2 and Scope 3 emissions
  
• Climate targets and progress
  
• Capital deployment and internal carbon pricing
  
  

These disclosures must be connected, consistent with financial statements, and focused on information that is material to investors.

‍

Where the Reporting Is Disclosed

The Sustainability Report is:

• Lodged with ASIC as part of the annual reporting package
  
• Generally publicly available once lodged
  
• Often published on corporate websites or ESG reporting hubs
  
  

This means climate disclosures are visible to:

• Investors and analysts
  
• Banks and insurers
  
• Customers and supply-chain partners
  
• Regulators and civil society
  
  

Summary: What This Means for Businesses

For many Australian organisations:

• Sustainability reporting is now a legal obligation
  
• Climate disclosures are part of financial reporting, not marketing
  
• Boards and executives are accountable
  
• Data, governance and audit readiness matter
  
  

Businesses must move beyond ad-hoc ESG reporting and build repeatable, defensible systems to meet ASRS requirements.

How Fair Supply Helps

Fair Supply supports organisations to comply with the Australian Sustainability Reporting Standards through a combination of expert consulting and technology.

Fair Supply helps businesses:

• Interpret ASRS and AASB S2 requirements
  
• Measure Scope 1, 2 and Scope 3 emissions
  
• Collect and manage sustainability data across value chains
  
• Support governance, risk and strategy disclosures
  
• Produce audit-ready sustainability and climate reports
  
  

Fair Supply’s platform and advisory team help organisations move from compliance to decision-useful sustainability reporting.

From voluntary to mandatory

Sustainability reporting in Australia has shifted decisively from voluntary ESG disclosures to mandatory climate-related financial reporting.

The Australian Sustainability Reporting Standards, particularly AASB S2, embed climate risk into the financial reporting system, aligned with global standards such as IFRS S2.

While the requirements are complex, they are manageable with the right systems, governance and expertise. Fair Supply supports organisations at every stage  from understanding obligations to producing compliant, credible disclosures.

‍