Author
Cini P.
Cini P.

A new era of climate-related reporting has arrived in Australia. It’s time to ensure entities required to report are preparing for the change. While climate reporting is only for specific public sector companies at this stage, the audit methodology we are developing will be able to apply to any entity required to report in the future.

In this new blog series, we’ll help you understand what the new requirements mean for your entity and provide practical tips and information. In this blog we introduce the basics of Australia’s new climate-related disclosure requirements. This information lays the groundwork for our future blogs, which will explore technical concepts, answer key questions, and help you approach reporting in a confident and informed way.

Our role, and how audits will phase in

Entities are required to obtain an independent audit of their climate-related financial disclosures from their financial statement auditors. For Queensland public sector entities, that means the Auditor-General will provide the audit opinion on these new disclosures.

Big public sector companies are the first public sector entities that need to comply with the new reporting requirements. Assurance for companies is phased in over 4 years as per ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001. While the timing varies, all companies will follow the same pathway from Year 1 to Year 4, leading up to reasonable assurance over the entire sustainability report.

Climate disclosures: from risk to regulation

Climate change is a challenge for entities, their customers, and other stakeholders. From extreme weather events to shifts in global markets and stakeholder expectations, those charged with governance need to understand the potential implications for their entities.

Around the world, governments, regulators, and investors have called for greater transparency on how entities are managing these risks and preparing for a low-carbon future. The Australian Government responded by introducing mandatory climate-related disclosures to certain entities, to align with global standards. These requirements aim to ensure entities are aware of their climate-related risks and impacts and are acting on them.

It’s about turning climate risk into a core part of financial reporting and strategic risk management because ignoring it is no longer an option.

Who must comply with the new disclosure requirements?

Climate-related financial disclosures were mandated for large businesses and financial institutions through the passing of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 on 17 September 2024.

Impacted entities are those:

  • required to lodge financial reports under Chapter 2M of the Corporations Act 2001 (Cth)
  • that meet the prescribed size thresholds (see below), or
  • that are a ‘registered corporation’ under the National Greenhouse and Energy Reporting Act 2007.

Group

Timing of reporting

Climate reporting criteria and thresholds

Size test
(2 or more are met)

Asset owners**

NGER Act reporters

1

1 January 2025 onwards

≥ 500 employees

Consolidated total assets ≥ $1b

Consolidated revenue ≥ $500m

Not applicable

Above NGER publication threshold (50kt)

2

1 July 2026 onwards

≥ 250 employees

Consolidated total assets ≥ $500m

Consolidated revenue ≥ $200m

Assets under 
management ≥ $5b*

All other NGER reporters

3***

1 July 2027 onwards

≥ 100 employees

Consolidated total assets ≥ $25m

Consolidated revenue ≥ $50m

Apply general size test

Not applicable

Notes:

*Explanatory memorandum in paragraph 4.68 states that ‘asset owners (registrable superannuation entities, registered schemes and retail CCIVs) are considered large if total assets under management are more than $5 billion’.

**Asset owners with assets under management of less than $5 billion are required to apply the general size test to determine whether they qualify as Group 2 or Group 3 entities.

***Group 3 entities only need to provide climate-related financial disclosures if they identify material climate-related risks or opportunities for that reporting period. Group 3 entities that do not have material risks or opportunities are required to disclose that fact and how they reached this conclusion. These disclosures are subject to the same level of assurance as noted in the next section, and form part of the directors' declaration.

NGER – national greenhouse and energy reporting.

 

Based on these requirements, 19 of QAO’s public sector company clients are impacted and we have initiated discussions with them about their readiness.

Public sector companies within scope will be required to prepare a sustainability report that complies with Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures issued by the Australian Accounting Standards Board (AASB).

What about non-corporate entities?

There are a range of entities not in scope for mandatory reporting. These include:

  • entities registered with the Australian Charities and Not-for-profits Commission
  • departments, statutory bodies, local governments, and universities, as they do not fall under the Corporations Act.

How QAO is preparing?

We provided an update on climate sustainability reporting at our technical audit update in February 2025. This included a Queensland Treasury and QAO perspective.

We also surveyed the readiness of Group 1 entities and provided feedback on where they are at, in comparison to other entities. We are progressively holding workshops with all our Group 1 clients, focused on raising awareness about the requirements of the Act and the Standard, preparedness, and future plans. Our readiness work with Group 1 entities is continuing through discussions with management and internal audit, review of documentation and internal audit reports, and assessing processes and models.

We have developed a methodology to ensure we comply with the Australian Standard on Sustainability Assurance, ASSA 5000 General requirements for Sustainability Assurance Engagements. This includes developing a framework to determine if, or when, we need to engage subject matter experts, and how to assess their expertise. Collaboration with the Australasian Council of Auditors-General sustainability working group is also helping to ensure consistency in our methodology and approach.

We are actively preparing to audit sustainability reporting by investing in targeted training and upskilling of our teams. We are developing tailored templates and workpapers to support consistent and high-quality audit procedures. We are also refining our stakeholder communication approaches to ensure our reporting is clear, transparent, and aligned with evolving expectations for sustainability auditing.

We are here to help

QAO is the auditor for Queensland public sector entities, and we will provide information to help ensure you are prepared.

In our next blog, we’ll take a deeper look at the standard and explore what it means for entities – including what public sector companies need to do to meet the new requirements.

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