AASB S2 Mandatory Climate Reporting Just Expanded to Group 2
by Sustainability Tracker 12/08/2026
News
by Sustainability Tracker 12/08/2026
News
This article was contributed by Sustainability Tracker.
Australia’s mandatory climate reporting regime moved into its second phase on 1 July 2026. Group 2 entities are now in their first reporting period under AASB S2, the Australian Accounting Standards Board’s climate-related disclosure standard, and the obligations carry the same legal weight as financial reporting under the Corporations Act. For a much larger cohort of Australian businesses, climate disclosure is no longer a voluntary exercise or something to plan for later.
This is a significantly larger and more varied group than the Group 1 entities that began reporting from January 2025. Group 1 was largely Australia’s biggest listed companies and NGER reporters. Group 2 pulls in a much broader mix of mid-cap and large private businesses, many of which have limited prior experience with structured sustainability disclosure.
For a business with a 30 June financial year end, the first AASB S2 reporting period beginning on or after 1 July 2026 runs through to 30 June 2027, with the resulting sustainability report typically due alongside the annual financial report. Within that report, entities need to disclose, across the four pillars AASB S2 shares with the TCFD framework:
Scope 3 emissions reporting isn’t mandatory in Year 1, but it becomes mandatory from each entity’s second reporting period, so the data collection and supplier engagement work needs to start now if it hasn’t already.
There’s a three-year modified liability period that applies to forward-looking elements such as Scope 3 emissions, scenario analysis, and transition plans, during which enforcement action is limited to regulators rather than private litigants. That relief does not extend to everything. Governance disclosures and Scope 1 and 2 emissions carry full liability from Year 1, and false or misleading climate statements can attract penalties of up to $15 million or 10% of annual turnover (whichever is greater) with directors able to be held personally liable.
External assurance also applies from an entity’s first AASB S2 reporting period, starting with limited assurance over specific disclosures such as Scope 1 and 2 emissions and governance. The auditor who signs off on the financial statements will also be signing off on the sustainability report, which means the standard of evidence expected is closer to financial reporting than to a typical sustainability page on a company website.
Group 2 entities sit in the middle of a lot of supply chains. A mid-cap manufacturer, retailer, or logistics business now needs Scope 1 and 2 data in place, and within a year will need to start mapping Scope 3, which includes emissions from suppliers and customers. Smaller businesses that supply into a Group 2 entity are likely to start receiving data requests they haven’t seen before, well ahead of their own Group 3 obligations landing in July 2027.
This is also where credible third-party verification starts to matter more than a self-reported claim. A director signing off on a governance disclosure or an emissions figure needs a defensible evidence base behind it, not an assertion. As the Santos greenwashing case recently underlined, Australian courts expect climate-related statements to be backed by a documented, reasonable basis. Independent verification frameworks, structured evidence collection, and clear substantiation processes are the difference between a disclosure that holds up under an auditor’s review and one that creates risk for the business and its directors.
For businesses newly in scope, the practical starting point is the same regardless of size: confirm whether you actually meet the Group 2 thresholds, get Scope 1 and 2 data collection live now rather than at year end, and start engaging an assurance provider early given rising demand across the market.
For businesses not yet in scope but supplying into one that is, the smart move is to get ahead of the data requests before they arrive rather than scrambling to respond to them.
Sustainability Tracker was built for exactly this kind of scrutiny: claims and disclosures that need to survive an external, evidence-based review.
If your business is working out what AASB S2 means for your reporting and your existing sustainability claims, our platform is designed to help you build that evidence base properly the first time and translate it to your customers, employees and stakeholders in a way they can digest.
Want to get started but not sure exactly where to start? Take our 2-minute sustainability quiz to find out where your business can have the most impact then search our verified sustainability consultant listing page.
This article reflects the regulatory position under the Corporations Act 2001 and AASB S2 Climate-related Disclosures as at August 2026. It is general information, not legal or financial advice; businesses should seek professional advice specific to their circumstances.
AASB S2 is Australia’s mandatory climate-related disclosure standard, issued by the Australian Accounting Standards Board and based on the international IFRS S2 standard. It requires in-scope entities to report on governance, strategy, risk management, and metrics and targets relating to climate risk, as part of their annual sustainability report under the Corporations Act 2001.
An entity is in Group 2 if it meets at least two of three thresholds on a consolidated basis: consolidated revenue of $200 million or more, gross assets of $500 million or more, or 250 or more employees. This sits below the Group 1 thresholds that captured Australia’s largest listed companies and NGER reporters from January 2025.
Group 2 entities entered their first mandatory reporting period on 1 July 2026. For a business with a 30 June year end, that first period runs to 30 June 2027, with the sustainability report typically due alongside the annual financial report.
No. Scope 3 emissions reporting is not required in an entity’s first AASB S2 reporting period. It becomes mandatory from the entity’s second reporting period, so Group 2 businesses have roughly a year to build the data collection and supplier engagement processes needed to report on it.
False or misleading climate statements can attract penalties of up to $15 million or 10% of annual turnover, whichever is greater, with directors able to be held personally liable. Governance disclosures and Scope 1 and 2 emissions carry full liability from Year 1. A three-year modified liability period applies to forward-looking elements such as Scope 3 emissions and transition plans, limiting enforcement of those specific disclosures to regulators rather than private litigants during that window.
Yes. External assurance applies from a Group 2 entity’s first AASB S2 reporting period, starting with limited assurance over specific disclosures such as Scope 1 and 2 emissions and governance. The same auditor who reviews the financial statements typically reviews the sustainability report.
Group 3 entities begin their first mandatory reporting period in July 2027, and smaller businesses that supply into a Group 2 entity may start receiving climate and emissions data requests well before their own obligations land. Building the evidence base early, rather than waiting for a mandatory deadline, is generally the lower-risk path.