Mandatory climate reporting in Australia starts on 1 January 2025

The Australian Government has finally fulfilled its promise to mandate climate reporting in Australia. The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill (Bill), which was introduced into Parliament four months ago, passed through the Senate on 22 August 2024. Royal Assent is expected soon.

What’s changed?

When is the start date?

The mandatory climate reporting legislation commences the day after the relevant Act receives Royal Assent, which is expected soon. At this stage, it will most likely be prior to 2 December 2024 so the start date is set at 1 January 2025.

However, not all entities will have to prepare climate reports for the first financial year commencing on or after 1 January 2025. Group 1 entities must report first, with a phase-in for Group 2 and Group 3 entities.

Which entities must prepare climate reports?

The Bill mandates climate reporting for entities required to prepare and lodge financial reports with the Australian Securities and Investments Commission (ASIC) under Chapter 2M of the Corporations Act 2001, but only if they meet certain criteria. In particular, entities that don’t meet the size thresholds tests in section 292A, and are neither NGER reporters nor asset owners, won’t have to prepare climate reports. The following table shows which entities will have to prepare climate reports:

	Large entities and their controlled entities meet at least two of three criteria			National Greenhouse Energy Reporting (NGER) reporters	Asset owners1
	Consolidated revenue	End of financial year consolidated gross assets	End of financial year employees
Group 1	$500 million or more	$1 billion or more	500 or more	Above NGER publication threshold	N/A
Group 2	$200 million or more	$500 million or more	250 or more	All other NGER reporters	$5 billion assets under management or more
Group 3	$50 million or more	$25 million or more	100 or more	N/A	N/A
1: Asset owners can only be registered schemes, registrable superannuation entities or retail CCIVs.

Source: Mandatory climate-related financial disclosures - Policy position statement

When is the first climate report required?

There is a phase-in period during which Group 1 entities must prepare their first mandatory climate reports during the first transitional period, Group 2 in the second transitional period, and Group 3 entities thereafter.

Climate reporting timeline

To determine the first financial year for which a mandatory climate report is required, we first consider the date that the financial year commences within the relevant transition period, and from there we can work out which year-end is affected.

Say we are looking at a Group 1 entity with a financial year starting on 1 July each year. The first transitional period runs from 1 January 2025 to 30 June 2026. 1 July 2025 would fall within this first transitional period, meaning the first-year end for a mandatory climate report is 30 June 2026.

Similarly, a Group 2 entity with a financial year beginning 1 October must report for the first time during the second transitional period. 1 October 2026 falls within the second transitional period, and the entity will prepare its first climate report for the year ending 30 September 2027.

The table below shows the effect of applying these transitional periods to entities with different year-ends.

	Climate reports required for the first year ending on dates shown below
Year-end	Group 1 entities	Group 2 entities	Group 3 entities
31 December year-end	31 December 2025	31 December 2027	31 December 2028
31 March year-end	31 March 2026	31 March 2028	31 March 2029
30 June year-end	30 June 2026	30 June 2027	30 June 2028
30 September year-end	30 September 2026	30 September 2027	30 September 2028

Late amendment

The Greens supported the passage of this Bill only after a late change to require entities to report against both a 1.5 degree, and a catastrophic warming scenario. The two scenarios are intended to ensure entities consider both transition and physical climate-related risks:

• Climate-related physical risks are generally associated with higher average global temperature outcomes, such as warmer climate, acute weather-related events or long-term shifts in climate patterns. This is a high global warming scenario, defined as an increase in global average temperature that well exceeds 2 degrees above pre-industrial levels. Therefore, the high global warming scenario analysis should be based on at least 2.5 degrees above pre-industrial levels.
• Climate-related transition risks are generally associated with lower average global temperature outcomes (reflecting efforts to transition to a lower carbon emission economy). This is a low global warming scenario, where the increase in global average temperature is limited to 1.5 degrees above pre-industrial levels.

Do you need help with your climate reporting?

Our sustainability reporting team can help you understand what this might mean for your organisation, contact us today.