Realise the opportunity: understanding mandatory climate-related financial reporting

Mandatory climate-related financial disclosures will likely be rolled out for many large organisations from January 2025. Whilst legislation has not yet passed, and as such, the final standards are not yet published, businesses can begin preparing for these changes today, to benefit from the opportunities they can present. 

29 May 2024

As businesses across the world continue to lift their investment in sustainability initiatives, there have been escalating market and stakeholder expectations for higher-quality, uniform climate and sustainability reporting. This has led to the emergence of a range of new international climate-related financial reporting standards.

Following other jurisdictions such as the UK and Singapore, the Australian Government has now set out its proposed rollout of mandatory climate-related financial reporting. These changes are expected to be passed into law in the coming months.

To help businesses of all sizes navigate what’s coming, we look at the requirements of the proposed reporting framework and pathways to prepare.

A view of what’s coming

The climate-related financial disclosures Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, was introduced to Parliament and referred to the Senate Economics Legislation Committee in March 20241. The Bill proposes to make climate-related financial reporting an obligation for the first group of the largest entities for financial years commencing from 1 January 2025. From there, the Government will step down the size thresholds, capturing a far broader group of organisations by 2027-28. 

Annual reporting periods  starting on or after

Large entities and their controlled entities meeting at least two of the following three criteria

NGER* Reporters

Asset Owners

Consolidated revenue

EOFY consolidated gross assets

EOFY employees

1 January 2025
Group 1

$500 million or more

$1 billion or more

500 or more

Above NGER Threshold


1 July 2026
Group 2

$200 million or more

$500 million or more

250 or more

All other NGER Reporters

>$5bn assets under management

1 July 2027
Group 3

$50 million or more

$25 million or more

100 or more



Note: *NGER: National Greenhouse Gas and Energy Reporting Scheme. Note certain exemptions are proposed (e.g. not-for-profits)

What needs to be reported?

Businesses will be required to make detailed disclosures regarding their governance, strategy, risk management, metrics and targets related to climate change.

  • Scope 1 and 2 emissions, expanding to Scope 3 (upstream and downstream supply chain) from the second year of reporting.
  • The current and anticipated effects of climate-related risks and opportunities on the entity’s financial position, financial performance, and cash flows.
  • Temperature scenario analysis for the reporting entity, which is used to inform an assessment of the resilience of the entity’s strategy and business model to climate-related changes.
  • Assurance requirements will be phased in over time, starting with limited assurance and eventually requiring all climate-related disclosures to be subject to reasonable assurance.

Where will it be reported?

  • Companies will need to include a sustainability report together with their financial report and both will need to be lodged with ASIC at the same time.
  • Depending on the type of entity, the sustainability report may also need to be publicly available on an entity’s website.

According to Nicky Landsbergen (Co-lead of the EY Sustainability Disclosure Hub) the proposed regulatory changes will extend to a significant number of Australian businesses across the economy. Nicky says that while many are already implementing environmental, social and governance initiatives, far fewer have the reporting capabilities the mandatory regime will require.

“Australian businesses have been focussed on developing and implementing sustainability actions, but many lack the governance, risk management and reporting capabilities to support the reporting and assurance to comply with the upcoming requirements,” Nicky says.

“An important first step for many businesses will be to conduct a gap assessment against the upcoming requirements in both internal processes and external disclosures across governance, strategy, risk management and metrics and targets. They will then need to develop an action plan to address gaps, which considers responsibilities and time horizons for reporting.”

Setting strong foundations

Charles Davis, Managing Director Sustainable Finance and ESG at Commonwealth Bank, says that while the legislation will result in an uplift in mandatory reporting, it will also present opportunities for customers.

“Institutional clients have a strong history of accessing sustainable finance, typically reflecting their maturity in regards to sustainability reporting. Standardisation of data should improve this even further, particularly with respect to targeting important areas such as Scope 3 emissions over time”

“These changes will result in an opportunity for our clients to engage across their supply chains and collaborate more effectively with their suppliers and other stakeholders through the standardisation of data and information. And CBA has a role to play in this aspect, by working with our customers and their stakeholders on integrated solutions and by providing access to capital to support the transition.”

Learn more

Speak to your Relationship Executive or a member of our Sustainable Finance team to find out more.

Things you should know

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    This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article.

    This is not an exhaustive outline of the requirements under the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, and there are also exemptions. The requirements may change before being passed into law. The information above does not constitute advice in any form and may be subject to change. You should seek professional, independent advice on how these requirements impact your business.

    Credit provided by the Commonwealth Bank of Australia. Sustainability Linked Loans are only available to approved business customers and for business purposes only. Applications for finance are subject to the Bank’s eligibility and suitability criteria and normal credit approval processes. Full terms and conditions, interest rates and fees are included in the loan offer. Bank fees and charges may apply. Rates and fees are subject to change.

    Ernst & Young Disclaimer: This communication provides general information which is current at the time of production. The information contained in this communication does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Ernst & Young disclaims all responsibility and liability (including, without limitation, for any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk. Liability limited by a scheme approved under Professional Standards Legislation.