Carbon Emissions Reporting in Australia: What Businesses Must In 2026

Australia is entering a new phase of mandatory climate and carbon emissions reporting. From 2025 and throughout 2026, many organisations will be legally required to disclose climate related financial information, including greenhouse gas emissions, as part of their annual reporting obligations.

For boards, executives and finance leaders, this represents a fundamental shift. Climate disclosures are now treated as financial disclosures, subject to director sign off, audit and regulatory oversight. Organisations that prepare early will be better positioned to manage risk, meet stakeholder expectations and avoid last minute compliance pressure.

This article outlines Australia’s mandatory climate reporting requirements, who must report, what must be disclosed, key deadlines, Scope 1–3 emissions obligations, risks of non-compliance, and practical steps to prepare.

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What is mandatory climate reporting in Australia?

Mandatory climate reporting is a legal requirement introduced through amendments to the Corporations Act 2001. It requires certain entities to prepare a Sustainability Report alongside their annual financial statements, disclosing climate related risks, opportunities and emissions.

The reporting framework is established under the Australian Sustainability Reporting Standards (ASRS), issued by the Australian Accounting Standards Board. The primary mandatory standard is AASB S2 Climate related Disclosures, which is closely aligned with international standards developed by the International Sustainability Standards Board.

The intent of the regime is clear: climate risk is now considered a financial risk, and organisations must explain how it is identified, governed and managed over time.

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Who needs to report?

Mandatory climate reporting applies to entities that already prepare financial reports under Chapter 2M of the Corporations Act. This includes many listed and large private companies, financial institutions, superannuation entities and managed investment schemes.

Entities are phased in across three reporting groups, based on size and reporting profile.

Group 1 entities (first reporters)

Entities that meet at least two of the following:

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

Group 1 also includes entities registered under the National Greenhouse and Energy Reporting (NGER) scheme. These organisations are required to report for financial years commencing on or after 1 January 2025.

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Group 2 entities

Entities that meet at least two of the following:

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

Group 2 entities commence reporting from 1 July 2026.

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Group 3 entities

Entities that meet at least two of the following:

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

Group 3 entities commence reporting from 1 July 2027.

While some organisations may not be legally in scope initially, many will still be indirectly affected. Larger customers, investors and lenders will increasingly require emissions data particularly Scope 3 emissions as part of their own mandatory climate reporting obligations.

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What are the climate reporting requirements?

In scope entities must prepare a Sustainability Report that forms part of their annual statutory reporting. This report must be approved by directors, lodged with ASIC and made publicly available.

The Sustainability Report must include climate statements covering the following areas:

Governance

How the board and management oversee climate related risks and opportunities, including roles, responsibilities and accountability mechanisms.

Strategy

How climate related risks and opportunities affect the organisation’s strategy, business model and financial planning across short-, medium- and long-term horizons.

Risk management

The processes used to identify, assess and manage climate-related risks, and how these processes are integrated into broader enterprise risk management frameworks.

Metrics and targets

The metrics used to assess climate performance and progress against targets, including greenhouse gas emissions.

Climate resilience and scenario analysis

An assessment of how resilient the organisation’s strategy and business model are under different climate scenarios, including those aligned to temperature outcomes specified in Australian legislation.

These disclosures are treated as financial disclosures and are subject to audit, regulatory scrutiny and liability provisions under the Corporations Act.

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Understanding greenhouse gas reporting (Scope 1, 2 and 3)

Greenhouse gas emissions reporting is a core component of mandatory climate reporting in Australia.

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Scope 1 emissions

Direct emissions from sources owned or controlled by the organisation, such as fuel combustion in company vehicles, onsite generators or industrial processes.

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Scope 2 emissions

Indirect emissions from the generation of purchased electricity, heating or cooling consumed by the organisation.

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Scope 3 emissions

All other indirect emissions that occur across the organisation’s value chain, both upstream and downstream. This includes emissions from suppliers, logistics, business travel, use of sold products and waste.

For many organisations, Scope 3 emissions represent the largest share of total emissions and are also the most complex to measure due to reliance on third-party data.

Scope 3 reporting is phased in under ASRS:

• Group 1: required for financial years commencing 1 January 2026
  
• Group 2: required from 1 July 2027
  
• Group 3: required from 1 July 2028
  

Limited transitional relief applies; however, entities must still disclose how they are managing Scope 3 emissions and improving data quality over time.

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Key deadlines and reporting timeline

The implementation of mandatory climate reporting occurs over several years:

• 2025: First reporting year for Group 1 entities
  
• 2026: Group 2 entities commence reporting; Scope 3 reporting begins for Group 1
  
• 2027–2028: Group 3 entities commence reporting; Scope 3 expands across all groups
  

Assurance requirements also increase progressively, moving from limited assurance toward more comprehensive audit expectations.

Sustainability Reports must be lodged with ASIC and made available to members, including presentation at AGMs where applicable.

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Common challenges for businesses

Organisations preparing for mandatory climate reporting commonly face challenges such as:

• Incomplete or fragmented emissions data
  
• Limited visibility into supplier and value-chain emissions
  
• Manual reporting processes that do not scale or withstand audit scrutiny
  
• Unclear governance and accountability for climate disclosures
  
• Capability gaps across finance, sustainability and risk functions
  

These challenges are most acute for Scope 3 emissions and climate scenario analysis, which require structured data, consistent assumptions and robust documentation.

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Risks of non-compliance

Climate disclosures are subject to the same liability framework as financial reporting. Risks include:

• Regulatory action by ASIC for misleading or incomplete disclosures
  
• Increased director exposure once transitional relief expires
  
• Reputational damage arising from inconsistent or unsupported claims
  
• Commercial risk, including loss of contracts where emissions data is required
  
• Greenwashing exposure where disclosures cannot be substantiated
  

While limited liability relief applies during the initial transition period, this protection is temporary and does not remove the need for defensible processes and evidence.

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How to prepare for climate reporting now

Effective preparation typically includes the following steps:

1. Confirm reporting obligations and timelines
   Determine your reporting group and applicable transition relief.
   
   
2. Map emissions sources
   Identify Scope 1, 2 and material Scope 3 emissions across operations and value chains.
   
   
3. Assess data quality and systems
   Move from ad-hoc spreadsheets toward scalable, auditable data infrastructure.
   
   
4. Engage suppliers early
   Supplier engagement takes time and is critical for Scope 3 emissions.
   
   
5. Strengthen governance and controls
   Ensure board oversight, internal controls and documentation align with ASRS expectations.
   
   
6. Test assurance readiness
   Assume disclosures will be subject to audit and prepare evidence accordingly.
   
   

How Fair Supply supports compliance

Fair Supply supports organisations navigating mandatory climate and emissions reporting through a combination of regulatory expertise and our purpose built technology.

Our carbon emissions accounting platform enables organisations to measure and manage Scope 1, 2 and 3 emissions, engage suppliers, maintain traceability from source data to disclosure, and align reporting with ASRS and audit requirements.

Our advisory team of carbon emissions consultants works alongside finance, risk and sustainability functions to design governance frameworks, close data gaps and support audit-ready Sustainability Reports.

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From regulation to readiness

Mandatory climate reporting in Australia represents a significant change in corporate reporting expectations. Climate and emissions disclosures are now embedded within financial reporting frameworks and subject to regulatory oversight.

Organisations that act early will be better positioned to manage risk, meet stakeholder expectations and navigate the transition with confidence. With appropriate systems, governance and support, compliance can be achieved in a structured and efficient manner.

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