In today’s global business landscape, sustainability has evolved from a buzzword to a core strategic priority. Companies are expected to not only deliver financial returns but also demonstrate environmental and social responsibility.
As Australia moves toward becoming a green economy, publishing sustainability reports has become essential for companies seeking to maintain transparency, credibility, and long-term resilience.
What is sustainability reporting?
Sustainability reporting is a type of non-financial reporting that allows companies to inform various stakeholders about the company’s sustainability measures. These measures span from environmental issues to social and governance metrics. The aim is to provide a clear picture of the progress, the risks associated, and the impact created or will create on the future.
Additionally, preparing a formal sustainability report allows the company to provide concrete evidence that they are taking the actions to which they have committed.
Why is sustainability reporting important?
- Enhancing Risk Management
Sustainability is being recognized as a core element of long-term business resilience. As risks tied to climate change, resource depletion, and evolving social expectations grow, sustainability reporting helps organizations identify and address these challenges early on.
For instance, the Carbon Disclosure Project (CDP) reports that 52% of companies have identified climate-related risks that could significantly impact their operations or strategy. At the same time, 63% of firms highlighted climate-related opportunities, demonstrating how structured reporting can uncover both potential threats and areas for value creation.
- Drive efficiency and cost
Monitoring sustainability metrics often reveals inefficiencies that can be corrected. By addressing these inefficiencies, businesses can lower operating costs, especially when sustainability reporting is aligned with energy efficiency programs or more sustainable procurement approaches.
- Helps in strategic decision making
In today’s environment, where businesses are under pressure from regulators, investors, and consumers alike, decisions must be made with greater clarity and foresight. A well-developed sustainability report offers valuable insights into a company’s ESG performance and emerging risks, supporting more informed decision-making across the organization.
It also enables companies to stay ahead of regulatory developments. For example, as mandatory climate-related disclosures become more common globally, companies that already have formal reporting systems in place are better equipped to adapt and comply.
- Build stakeholder trust and engagement
Transparency has become a baseline expectation.
Sustainability reports based on global standards provide a verified and consistent way to communicate a company’s commitments and actions on key issues like climate responsibility, equity, and ethical sourcing.
- Investor appeal
With ESG criteria playing a growing role in investment decisions, clear and credible sustainability reports allow investors to better assess a company’s risk exposure, governance quality, and growth potential.
Overall, sustainability reporting signals that the business is forward-thinking, well-managed, and aligned with global sustainability expectations, making it a more attractive and trustworthy investment option.
Is Publishing Sustainability Reports mandatory in Australia?
The Australian government, through the Australian Accounting Standards Board (AASB) has made publishing sustainability reports mandatory as described under AASB S2 – climate related financial disclosures mandatory. However, the implementation is being phased gradually, based on the size and type of the reporting entity.
Specifically, the timelines are as follows –
Group |
Criteria |
Starting Period |
|---|---|---|
Group 1 – Large Businesses
|
Any enterprise meeting 2 of the 3 thresholds –
$500 million or more Consolidated gross revenue $1 billion or more Consolidated assets 500 Employees OR NGER Reporters: Above NGER publication threshold as per the NGER Act. OR Asset Owners: Scoped out of Group 1 |
For period beginning on or after 1 January 2025.
|
Group 2 – Medium Businesses
|
Any enterprise meeting 2 of the 3 thresholds –
$200 million or more Consolidated gross revenue $500 million or more Consolidated assets >250 Employees OR NGER Reporters: All other NGER reporters OR Asset Owners: $5 billion or more value of assets |
For period beginning on or after 1 January 2026.
|
Group 3 – All Other Businesses
|
Any enterprise meeting 2 of the 3 thresholds –
$50 million or more Consolidated gross revenue $25 million or more Consolidated assets >100 Employees |
For period beginning on or after 1 January 2027.
|
However, initially, only climate-related disclosures (under AASB S2) are mandatory. Broader sustainability elements are currently voluntary, with future expansion possible.
What Standards Do Companies in Australia Need to Follow While Making Sustainability Reports?
Australian sustainability reporting is governed by the Australian Sustainability Reporting Standards (ASRS), issued by the AASB and aligned with international sustainability reporting frameworks:
- AASB S2 – Climate Related Disclosures
These are very similar to IFRS S2 with some modifications. For example, no SASB metrics.
- AASB S1 – General requirements for sustainability related financial disclosures
These requirements are voluntary and were built using IFRS S1 as the guideline.
This means, under AASB S1, companies need to report all material sustainability related financial information that can impact stakeholders’ decisions.
Additionally, these sustainability reports should be published as part of the financial reports.
- Assurance Standards by AUASB
ASSA 5000 and ASSA 5010 introduce assurance engagement requirements, phased in with limited assurance first, scaling up to reasonable assurance by July 2030.
You can find detailed information about these standards here.
Government Aid for Beginning Sustainability Reporting
To support entities starting sustainability reporting, the government has rolled out several assistance measures:
- ASIC RG 280:
- Offers practical guidance, relief options, and explanations of interactions between sustainability and existing financial reporting requirements.
- Phased Assurance Rollout:
- The limited-to-reasonable assurance timeline (until July 2030) provides breathing room for companies to build capabilities.
- Communication & Resources:
- ASIC and AASB provide online materials, webinars, and support tools (e.g., decision trees from BDO) to help entities assess reporting obligations and manage disclosure implementation.
- Liability Protections for Directors:
- Transitional “safe harbour” periods limit liability around disclosures such as Scope 3 emissions, scenario plans, and forward-looking statements—protecting directors during initial compliance years.
- Alignment with Global Standards:
- Australia’s adoption of IFRS/ISSB-aligned standards fosters clarity, comparability, and global investor confidence.
Sustainability reports are more than just a compliance exercise. It has become a strategic tool for building resilience, improving transparency, and unlocking long-term value. In Australia, where regulatory expectations and ESG consciousness are growing rapidly, businesses that adopt sustainability reporting early will be better positioned to lead in the evolving economy.