Implications for boards and executives
This year’s Federal Budget didn’t introduce new sustainability reporting rules. Instead, it addressed a growing concern shared by boards, executives and finance teams: how to make mandatory climate reporting workable in practice.
For organisations preparing for Australian Sustainability Reporting Standards (ASRS), the message was clear, the Government is backing the reporting requirements, but recognises that first‑year implementation needs to be realistic and proportionate.
Key Takeaways
- ASRS didn’t slow down, but fewer companies are now in scope.
- Group 3 thresholds doubled, lifting revenue from $50m → $100m and assets from $25m → $50m (employees unchanged at 100).
- Companies dropping below these thresholds no longer need to lodge audited financial reports, directors’ reports or sustainability reports.
- The Government will consult on three targeted reforms to make climate reporting more workable, without changing the timeline.
- Phasing remains locked in: Group 1 is reporting now, Group 2 starts July 2026, Group 3 follows in 2027.
A reset on who reports, not when
The Federal Budget didn’t delay mandatory climate reporting. It also didn’t roll back ASRS.
What it did do was reset the practical burden, particularly for mid‑market and privately owned businesses preparing for Group 3 reporting.
The headline change: Group 3 proprietary company thresholds have doubled.
- Consolidated revenue: $50 million → 100 million
- Consolidated gross assets: $25 million → $50 million
- Employee threshold: unchanged at 100
For companies that now fall below these revised thresholds, the impact is material. They are no longer required to lodge:
- an audited financial report
- a directors’ report
- or a sustainability report, including mandatory climate disclosures
That is meaningful for organisations that were only just tipping into scope.
What does this mean if you were just inside the Group 3 threshold?
If your business sits between the old and new thresholds, roughly $50m–$100m in revenue or $25m–$50m in assets, this is the change that affects you most directly.
Under the original rules, you were likely in scope for mandatory ASRS reporting from July 2027. Under the revised thresholds, you may no longer be required to lodge a formal sustainability report.
But falling out of mandatory reporting doesn’t mean falling out of the ESG conversation.
Your lenders are still pricing climate risk into your loan terms. Your largest clients are still asking for your supply chain emissions data. And your insurers are still assessing your building and asset-level exposure. The voluntary disclosure question (what level of reporting makes sense for your business) is now more important than the mandatory one.
If you’re unsure whether you’re still in scope under the new thresholds, take our free Climate Readiness Assessment to get an immediate picture of where you stand.
Expectations haven’t disappeared
Falling out of mandatory ASRS reporting doesn’t mean falling out of the climate reporting ecosystem.
In practice:
- lenders are still assessing climate risk
- insurers are still assessing exposure
- supply‑chain data requests are still flowing from larger reporting entities
- and boards are still accountable for material risks
For many businesses, the real question is no longer “Do we have to report?” but “What level of disclosure makes sense for our business?”
Even where reporting isn’t mandatory, your data is increasingly needed by others, particularly as Group 1 entities already reporting under ASRS seek emissions information from suppliers and service providers to meet their own obligations, a dynamic we explore further in our insight on why Group 1 clients ask for carbon data.
Three reforms that matter for climate reporters
Alongside the threshold changes, the Budget confirmed the Government will consult on three targeted changes to the climate disclosure regime itself, aimed at first‑year practicality.
1. Clarifying “undue cost or effort”
The Government has signalled clearer guidance on how “undue cost or effort” applies in practice, including when entities can omit Scope 3 categories that cannot reasonably be measured.
This addresses one of the most common pain points we see: how far organisations are expected to go when supplier data simply doesn’t exist yet.
2. Recalibrating assurance expectations
Assurance settings will be reviewed so they’re proportionate to the size and maturity of the reporting entity, acknowledging that robust systems and data controls take time to build.
3. Clearer boundaries on supplier information requests
Small businesses are explicitly called out, with the Government intending to set clearer limits on how climate data requests flow through value chains.
This is an important signal that reporting entities are expected to exercise judgement, not default to blanket data requests.
What hasn’t changed (and matters just as much)
Despite the relief measures:
- There is no delay to reporting phasing.
- Group 1 entities are already reporting.
- Group 2 begins in July 2026.
- Group 3 still follows in 2027.
Board responsibility, governance expectations and the direction of travel remain intact.
The Budget doesn’t remove the need to prepare, it reframes sensible, staged progress instead of rushed precision. That “preparation and progress over perfection” mindset sits at the core of Acumentis ESG’s reporting and client support approach.
What boards should do now
Whether an organisation is:
- still in scope,
- newly out of scope, or
- reporting voluntarily to meet market expectations,
The short‑term focus should be the same:
- confirm whether climate risk is material
- put governance around how climate related decisions are made (See: Embedding climate into the risk engine)
- document assumptions, limitations and judgement calls
- prioritise data and systems that matter most to decision‑makers (See: Why Data Digitisation is now Essential)
Reach out with any questions or to discuss how these changes impact your climate reporting.
