In May 2026, ASIC published its first observations on mandatory sustainability reports, drawn from the real disclosures of 259 of Australia’s largest companies (Group 1 reporters). If you’re a Group 2 business now preparing your own first ASRS report, this article shares the real-world evidence about where the regulator is looking.
What did ASIC’s first observations reveal?
I’ve read through ASIC’s review of the first 259 reports, and three gaps stand out.
- Incorrect Disclaimers: Some entities attempted to include legal disclaimers to limit investor reliance on their sustainability statements. ASIC was very clear that this practice is not permitted.
- Unconnected Disclosures: Many firms failed to connect past climate disruptions, like a flood that hit their operations, to their forward-looking risk models.
- Vague Assumptions: Judgements and measurement uncertainties were often obscured rather than explained. This is a key area where auditors will look for more detail.
This feedback serves as the clearest guide yet for Group 2 reporting strategy. It tells you exactly where the regulatory attention will land next.
What did the first reports look like in practice?
Even Australia’s largest mining, construction, and finance giants found the first year of reporting difficult.
Almost all of them relied heavily on transitional reliefs to get their disclosures over the line. They used the grace periods to defer quantitative financial impacts and complex value chain calculations.
This is not a reason for smaller businesses to despair. It’s just evidence that building your data capability now, while the standards are still at their most achievable point, is the smartest move you can make.
Expert Tip: Most entities used the transitional relief on Scope 3 because their data was not ready. Year 2 is when that protection begins to decrease.
Why does Scope 3 reporting become mandatory in Year 2?
Scope 3 emissions are a mandatory requirement from your second year of reporting under the AASB S2 standard. That gives you roughly one full year to get ready. Here’s why this represents the single biggest operational step-change for your finance and operations teams.
- Moving Past Estimates: For most Group 2 businesses, Year 2 will be the first year they are required to measure Scope 3 at all. Spend-based estimates are a starting point, but auditors will expect to see a methodology that improves over time.
- Lining Up Suppliers: Active supplier engagement protocols will be essential for collecting the activity-based data that underpins a credible Scope 3 disclosure.
- Collecting Tenant Data: For property and infrastructure managers, the good news is that automated utility data collection systems already hold much of what you need. The focus now is on ensuring that data is captured in a format your reporting framework can use.
Understanding which of the 15 GHG Protocol categories are material to your business is the first step. We’re currently developing a Scope 3 resource specifically for Australian businesses, so watch this space.
How does the ASSA 5010 timeline apply to your business?
The Australian Auditing and Assurance Standards Board’s ASSA 5010 standard sets out a phased approach to audit requirements. It transitions your disclosures from limited reviews to reasonable assurance over time.
- Years 1 to 3: The focus is on limited assurance ASRS rules. Your auditor will check if your Scope 1 and 2 data is free from obvious errors.
- Year 4 Onwards: The bar rises to reasonable assurance AASB S2 requirements. This is the same rigorous, financial-grade audit applied to your annual financial statements.
The takeaway is that the modified liability protections and the assurance grace periods expire at roughly the same time. The organisations that use Years 1 to 3 to build genuine data capability, rather than simply ticking compliance boxes, will be significantly better positioned when the full audit requirements come into effect.
What does “good” look like for your first report?
Based on our ASRS first-year learnings, here’s the standard to write to from day one.
- Board-Level Ownership: Your governance documentation must explicitly name the director or committee with climate risk oversight. You can learn how to set this up in our guide to the governance gap.
- Connected Disclosures: You must link past weather events that disrupted your cash flow directly to your forward-looking strategic planning. Auditors will look for the connection whether you draw it or not.
- Documented Judgements: Every assumption, scenario horizon, and data uncertainty must be clearly explained so auditors don’t have to guess.
Get these three right in Year 1, and you’re already ahead of where most first reporters landed, and you protect your board from the risk of personal liability for directors.
Why is internal ownership more important than compliance?
Boards that outsource their ASRS reporting entirely, rather than using an adviser to build internal capability, pay full engagement fees every year with no growing organisational knowledge to show for it.
By Year 4, when reasonable assurance requires your data systems to withstand a financial-grade audit, you need your own people to own those systems.
An adviser can prepare the report. Only your team can own the data trail behind it. This is why every Acumentis engagement is structured around capability transfer, not dependency.
How Acumentis helps Group 2 get Year 1 ASRS reporting right
We work with Australian businesses to turn Group 1’s lessons into your first-year advantage. Four key things we focus on:
- Year 1 Readiness Audit: We assess whether your Scope 1 and 2 data collection can actually withstand limited assurance.
- Scope 3 Methodology Build: We help you move from spend-based estimates to activity-based data where material.
- Assurance Preparation: We engage with your external auditors early to understand what evidence limited assurance requires.
- Board Governance Documentation: We ensure your ownership and oversight trails are explicit, documented, and auditable.
Turning lessons into long-term authority
The first mandatory reports showed what Australia’s largest companies could produce under intense time pressure and transitional relief. Group 2 entities have something those first reporters didn’t: a public record of what worked and what didn’t.
ASIC’s observations read less as a rebuke and more like a roadmap. The entities that treat them as such, and start building now, are the ones who will find Year 4 manageable rather than expensive.
The boards I work with who feel most confident are the ones who used Year 1 and 2 to build genuine internal capability, rather than relying on a well-resourced adviser relationship.
Group 2 your reporting window is open. Here’s where to start.
Find out where your Year 1 readiness stands across all four AASB S2 pillars in your own time, at no cost.
We’ll review your current framework and tell you exactly what your 9-month roadmap looks like. No jargon, no obligation.
