15 August 2025
From 1 July 2025, new corporate climate reporting laws have come into effect, which have been described as ‘the biggest change to corporate reporting in a generation’ by ASIC’s Chair.
World-leading changes
The world-leading legislative amendments to the Corporations Act 2001 (the Act) requires certain organisations to make detailed disclosures about climate-related risks and opportunities. This is to be carried out through a phased approach, beginning with ‘Group 1’ being the largest emitters and corporations who are equivalent in scale to the ASX 200, from the first reporting period that commenced from 1 January 2025.
Subsequently, the scope of the requirements will extend to a broader range of smaller organisations, ‘Group 2’ and Group 3’ from the first reporting period commencing on or after 1 July 2026 and 1 July 2027, respectively.
These changes require qualifying organisations to prepare detailed reporting on their climate-related risks and opportunities in a mandated ‘Sustainability Report,’ in accordance with the AASB S2.
AASB S2 is the mandatory standard for climate-related disclosures.
Who do the changes apply to?
Exempted Entities
Entities that are exempt from preparing sustainability reports include:
- Small to medium sized businesses; and
- Charities registered with the Australian Charities and Not-for-profits Commission and public authorities.
Small to medium sized businesses experiencing strong growth should be aware of whether they are approaching the Group 3 thresholds and be ready to seek the appropriate advice on their obligations.
What is required?
Qualifying Entities
Qualifying entities will be required to lodge their annual Sustainability Report with ASIC alongside their Annual Report. The Sustainability Report will be required to contain the Entity’s climate statements for the year as well as supporting notes and the directors’ declaration about the statements and notes.
The climate statements are required to address:
- Material climate related financial risks or opportunities faced by the entity;
- Climate related metrics and targets required to be disclosed under AASB S2, including the entity’s scope 1, 2 and 3 greenhouse gas emissions;
- Information about the governance of, the strategy of, or any risk management by the entity in relation to, the risks, opportunities, metrics and targets referred to above; and
- Climate-related scenario analysis assessing the Entity’s climate resilience under at least two possible future states. The two current mandated scenarios are:
- increase in global average temperature of 1.5°C above pre-industrial levels, and
- increase in global average temperature well exceeding 2°C above pre-industrial levels.
Consolidated Groups
Consolidated groups enjoy streamlined reporting requirements. Under the Act, where a parent entity is required to prepare consolidated financial statements it may elect to prepare a sustainability report for the consolidated group.
Directors’ Obligations and Entity Liability
Directors are obliged to oversee the preparation of the Annual Report in compliance with the Act. They must ensure that the entity’s financial statements disclose any information that will materially impact the financial position, performance and prospects of the entity, including climate-change and sustainability-related information.
Directors must make a declaration that that the Sustainability Report complies with the Climate Reporting legislation, including the AASB S2. As with their other obligations, directors must exercise due care and diligence in overseeing the reporting and assessing the materiality of climate related risks and opportunities to their organisation. Part of this may involve undertaking assessments and gap analysis on the company’s current climate risks and what actions need to be taken to achieve compliance.
The existing liability framework under the Act will continue to apply to entity disclosures, including the director duties and misleading and deceptive conduct provisions.
However, under a modified liability regime, entities will be provided with relief for a fixed period between 1 July 2025 and 30 June 2028 for disclosures relating to specific types of emissions and certain climate related forward-looking statements. Only ASIC will be able to bring action relating to breaches of relevant provisions in relation to these disclosures and the regulator’s remedies will be limited to injunctions and declarations.
A such, reporting entities will have immunity from civil claims brought by private litigants regarding disclosures made in sustainability reports and relevant auditors’ reports as they relate to sustainability. This is designed to incentivise full disclosure from entities.
Next Steps
The team at Cooper Partners have extensive experience in advising and assisting corporate entities and their groups attend to their statutory requirements, beyond merely tax compliance. For any questions or tailored advice, contact the Cooper Partners engagement team to see how this decision might affect you.
If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.
Author:
Andrew Tuckey, Principal
This newsletter is current as of 15 August 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve. Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.
This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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