Group 2 entities must report under AASB S2 Climate-related Disclosures for financial years beginning on or after 1 July 2026. An entity is in Group 2 if it meets two of three size tests, $200 million revenue, $500 million gross assets, or 250 employees, or if it falls into one of two other categories.
Whether your organisation is in scope is a question for your accountant or auditor. Where ESEA can help is the environmental and operational data behind the disclosures. Our sustainability reporting support covers scoping, data organisation, and gap analysis.
What is AASB S2?
AASB S2 is the Australian Sustainability Reporting Standard for climate-related disclosures, issued by the Australian Accounting Standards Board (AASB) in September 2024. Under the Corporations Act 2001, entities that must prepare annual financial reports under Chapter 2M and meet the size or emissions tests must also prepare a sustainability report. That report includes climate statements prepared under AASB S2.
The Australian Securities and Investments Commission (ASIC) explains how the regime works in Regulatory Guide 280 (RG 280) Sustainability reporting, issued on 31 March 2025.
Which group is my organisation in?
Mandatory climate reporting is being phased in across three groups. An entity, together with the entities it controls, falls into a group if it meets at least two of the three size tests at the end of the financial year. Some entities also fall into a group through their emissions reporting or the assets they hold.
| Group | Financial years beginning on or after | Size tests (meet two of three) | Also included |
|---|---|---|---|
| Group 1 | 1 January 2025 | Consolidated revenue of $500 million or more, gross assets of $1 billion or more, 500 or more employees | NGER registered corporations that meet the threshold in s 13(1)(a) of the NGER Act |
| Group 2 | 1 July 2026 | Consolidated revenue of $200 million or more, gross assets of $500 million or more, 250 or more employees | All other NGER reporters, and registered schemes, superannuation entities, and retail CCIVs with assets of $5 billion or more |
| Group 3 | 1 July 2027 | Consolidated revenue of $50 million or more, gross assets of $25 million or more, 100 or more employees | Full climate disclosures are only needed if the entity has material climate-related risks or opportunities |
NGER refers to the National Greenhouse and Energy Reporting Act 2007. CCIV stands for corporate collective investment vehicle.
When does Group 2 start reporting?
The obligation starts with the first financial year that begins on or after 1 July 2026, not on 1 July 2026 itself. For an entity with a 30 June year end, the first reporting year runs from 1 July 2026 to 30 June 2027. For an entity with a 31 December year end, the first reporting year is the 2027 calendar year.
The first sustainability report is then lodged with the annual financial report for that year. In practice, this means the data for Group 2’s first report is being generated now.
What does a Group 3 entity have to do?
A Group 3 entity still prepares a sustainability report. If it has no material climate-related risks or opportunities, its climate statements can instead state that, and explain how it reached that conclusion. If it does have material risks or opportunities, it reports in full under AASB S2.
The Australian Government has also consulted on raising the thresholds for large proprietary companies, which would take some smaller entities out of financial reporting, and so out of sustainability reporting. At the time of writing, that change is a proposal and has not been legislated.
What does AASB S2 require?
AASB S2 asks for disclosures on governance, strategy, risk management, and metrics and targets for climate-related risks and opportunities. This includes greenhouse gas emissions, with Scope 3 emissions required from the second reporting year, and climate scenario analysis.
Much of the information sits outside the finance team. Energy use, fuel, waste, land, water, and site-level environmental risk data often come from operations, facilities, and environmental records that were never set up for reporting.
What this means for your project
Confirm your group with your accountant or auditor first. The size tests, the treatment of controlled entities, and your financial year end all affect the answer, and they are accounting questions.
If you are in Group 2, start organising the underlying data now. Most of the first reporting year is still ahead, and gaps are easier to fix before the year is over than after.
ESEA can help scope which environmental and operational information is relevant, organise it into a usable form, and identify gaps against the disclosure requirements. We do not prepare climate statements, give accounting advice, or provide assurance. Our ESG advisory and sustainability peer review services can support the wider reporting process.
Frequently asked questions
When does Group 2 have to report?
Group 2 reports for financial years beginning on or after 1 July 2026. For a 30 June year end, the first reporting year is 1 July 2026 to 30 June 2027, and the sustainability report is lodged with that year’s annual financial report. For a 31 December year end, the first reporting year is the 2027 calendar year.
What happens if we only meet one threshold?
Meeting one of the three size tests is not enough on its own. An entity needs to meet two of the three tests for a group, unless it falls in through another category, such as being an NGER reporter or an asset owner with $5 billion or more. If you meet one test now, check again each year, as size can change.
Does ESEA prepare the climate statement?
No. The climate statement is the entity’s own disclosure, prepared with its accountants and subject to assurance by its auditor. ESEA supports the environmental side, scoping the relevant information, organising environmental and operational data, and identifying gaps against AASB S2. We do not provide accounting advice or assurance.
Sources
- AASB S2 Climate-related Disclosures (September 2024)
- AASB, AASB S2 Knowledge Hub
- ASIC, Regulatory Guide 280 Sustainability reporting
- ASIC, Who must prepare a sustainability report?
- Treasury, Raising the reporting threshold for large proprietary companies
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