ASRS Group 2 climate reports from 1 July 2026: who's caught now

Australia's mandatory climate reporting regime phases in by size, and ASRS Group 2 is the second wave. Group 2 entities must prepare a sustainability report applying the Australian Sustainability Reporting Standards (chiefly AASB S2 Climate-related Disclosures) for financial years beginning on or after 1 July 2026. In practice that means most Group 2 reporters first disclose for the FY27 reporting year, lodged alongside the annual report.

If your entity is required to prepare an annual financial report under Chapter 2M of the *Corporations Act 2001* and meets at least two of three size thresholds (or is an NGER registered corporation, or an asset owner with $5 billion or more in assets), you are likely a Group 2 entity. The regime was introduced by the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, with reporting standards issued by the Australian Accounting Standards Board (AASB) and oversight by ASIC.

What is ASRS Group 2?

The Australian Sustainability Reporting Standards comprise AASB S1 (general sustainability-related financial information, voluntary) and AASB S2 (climate-related disclosures, mandatory). The mandatory obligation attaches to AASB S2.

Reporting entities are split into three groups that phase in over successive years:

• Group 1 — the largest entities, for financial years commencing on or after 1 January 2025.
• Group 2 — mid-tier entities, for financial years commencing on or after 1 July 2026.
• Group 3 — smaller in-scope entities, for financial years commencing on or after 1 July 2027.

Group 2 is the cohort being pulled in now. The substance of what must be disclosed is set by AASB S2; the obligation to prepare the report sits in the Corporations Act. For the underlying obligation, see /obligations/asrs-group-2-disclosure-1-jul-2026, and for the regime overview, /obligations/asrs-climate-disclosure.

Who is caught from 1 July 2026

You are generally caught as a Group 2 entity if both of the following apply:

• You are required to prepare and lodge an annual financial report under Chapter 2M of the Corporations Act (this includes most large proprietary companies, public companies, and registered schemes); and
• You meet the Group 2 size thresholds (below), but are not large enough to have been a Group 1 entity in an earlier period.

Two further limbs bring entities into Group 2 regardless of the size test (ASIC RG 280, Table 2):

• entities that are registered corporations under the NGER Act (or required to apply for registration), if not already in Group 1; and
• registered schemes, RSEs and retail CCIVs with assets of $5 billion or more at the end of the financial year.

Not every business is in scope. Entities that are not required to prepare an annual financial report under Chapter 2M (for example small proprietary companies with no Chapter 2M obligation, and foreign companies) do not prepare a sustainability report; smaller entities may fall into Group 3. If you are unsure which group applies, our climate reporting tier checker walks through the thresholds.

The Group 2 size thresholds

Group 2 status turns on meeting at least two of three thresholds, assessed on a consolidated group basis for the relevant financial year:

These are the Group 2 criteria in ASIC's RG 280 (Table 2, reflecting s 1707B of the Corporations Act). It is a two-of-three test, measured for the entity and the entities it controls, not the single entity alone.

Because the test uses two of three, an asset-heavy entity with modest revenue, or a large-headcount services firm, can be caught even if one metric looks small. Assess all three.

What Group 2 entities must disclose

AASB S2 is built on the four pillars familiar from the TCFD framework:

• Governance — the board and management oversight of climate-related risks and opportunities.
• Strategy — material climate-related risks and opportunities, their effects on the business model and strategy, and climate resilience / scenario analysis.
• Risk management — how climate risks are identified, assessed and integrated into enterprise risk management.
• Metrics and targets — including greenhouse gas emissions and any climate targets.

On emissions, Group 2 entities disclose Scope 1 and Scope 2 greenhouse gas emissions from the first reporting year. AASB S2 gives transition relief from disclosing Scope 3 (value-chain) emissions and comparative information in the first annual reporting period in which it is applied (RG 280.107), so Scope 3 is required from the second year and data collection should start immediately.

The sustainability report is lodged as part of the annual report and is subject to directors' declaration and director duties — climate disclosure is a board-level obligation, not just a sustainability-team task. See the directors hub for context on board accountability.

First-year concessions and assurance

The regime phases in obligations as well as entities. Key first-year features for Group 2:

• Comparatives: no comparative information is required in the first annual reporting period.
• Scope 3 relief: Scope 3 emissions are not required in year one (as above).
• Modified liability: for sustainability reports for financial years commencing between 1 January 2025 and 31 December 2027, statements about Scope 3 emissions, scenario analysis and transition plans made to comply with a sustainability standard are "protected statements": no legal action other than criminal action, or action by ASIC, can be brought in relation to them (RG 280.61–RG 280.63).
• Assurance: the financial report auditor also provides assurance over the climate information, phased in under AUASB standard ASSA 5010 (AUASB). In year one, limited assurance applies to Scope 1 and 2 emissions and parts of the strategy disclosures, with most other disclosures moving to limited assurance in years two and three and reasonable assurance from year four.

These concessions reduce first-year burden but do not defer the obligation to report.

What to do now

For an entity that expects to be in Group 2, the practical sequence is:

1. Confirm your group and start date. Apply the two-of-three test on a consolidated basis and check any NGER limb. Use the climate reporting tier checker as a first pass.
2. Establish governance. Allocate board and management responsibility now; AASB S2 expects evidence of oversight processes, not a last-minute sign-off.
3. Build the emissions inventory. Stand up Scope 1 and 2 measurement aligned to NGER, and begin Scope 3 data collection ahead of its year-two start.
4. Run scenario analysis. Climate resilience assessment takes time and cross-functional input.
5. Engage assurance early. Talk to your auditor about the limited-assurance scope for year one.
6. Map the reporting calendar. Align the sustainability report to your annual report lodgement.

Common pitfalls

• Assuming "we're too small." The two-of-three test catches asset- or headcount-heavy entities with modest revenue. Test all three metrics.
• Forgetting the NGER and asset-owner limbs. NGER registered corporations, and schemes, RSEs and retail CCIVs with $5 billion or more in assets, are in Group 2 regardless of the size test.
• Single-entity thinking. Thresholds apply at the consolidated level — include controlled entities.
• Deferring Scope 3 data work. It is relieved in year one but mandatory in year two; the data lag is the problem, not the disclosure.
• Treating it as a reporting exercise. AASB S2 requires real governance, strategy and risk-management processes that must exist before the report is written.
• Misreading the thresholds. The Group 2 tests are "equal to or greater than" $200 million revenue, $500 million gross assets and 250 employees; an entity exactly at a threshold meets it.