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 lodge audited financial reports under Chapter 2M of the *Corporations Act 2001* and meets at least two of three size thresholds, 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, first reporting from 1 January 2025.
• Group 2 — mid-tier entities, first reporting from 1 July 2026.
• Group 3 — smaller in-scope entities, phasing in later.

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.

Entities that hold emissions reporting obligations under the National Greenhouse and Energy Reporting (NGER) scheme may also be drawn in through a separate limb, regardless of the size tests — NGER registrants and controlling corporations should check their position carefully against the legislation.

Not every business is in scope. Entities below all the size thresholds, and those not required to lodge under Chapter 2M, generally fall outside the regime (or into a later group). 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 figures should be confirmed against the current legislation, as thresholds and group boundaries have been the subject of policy attention — (verify the current figures with Treasury and ASIC before relying on them). The key structural point is stable: it is a two-of-three test, measured at the consolidated level, not the single-entity level.

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. Scope 3 (value-chain emissions) is not required in the first year but becomes mandatory from the second reporting year, so data-collection for Scope 3 should start immediately. Emissions should be measured consistent with the NGER methodology where applicable.

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-period figures are required in the first report.
• Scope 3 relief: Scope 3 emissions and the associated scenario-linked disclosures attract relief in year one (as above).
• Modified liability ("immunity"): a transitional limited-liability period applies to certain forward-looking statements (notably Scope 3 and scenario analysis), restricting who can take action for a fixed window. Confirm the scope and duration of this relief against the current Corporations Act provisions.
• Assurance: climate disclosures are subject to a phased assurance regime overseen by the AUASB. Limited assurance generally applies first (typically over Scope 1 and 2 emissions), building toward reasonable assurance over time.

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 limb. NGER registrants can be in scope independent of size.
• 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.
• Relying on stale thresholds. The figures above should be re-checked against current legislation before you finalise your scoping conclusion.