The Case for a Fractional CSO: Executive Sustainability Leadership Without the Full-Time Cost
A Fractional CSO gives organisations access to executive-level sustainability expertise without a full-time commitment. Sustainability expectations are rising. Investors, customers, employees, regulators, and stakeholders expect credible progress, clear reporting, and stronger sustainability leadership. Many businesses understand this shift. They see the need for ESG strategy, reporting, and governance. But they face a practical constraint. They do not have the budget, or the immediate need, for a full-time Chief Sustainability Officer (CSO), or at least someone with the deep experience to be able to accomplish such a broad range of projects (and understand how it fits with the business strategy). A Fractional CSO closes that gap. It gives businesses access to senior sustainability leadership without committing to a full-time hire. This allows businesses to move forward with structure and clarity without incurring fixed costs or long recruitment cycles. What does a Fractional CSO do? A fractional executive is an experienced professional who works with a business on a part-time or project basis. Instead of being employed full-time, they are engaged for the hours they work or the outcomes they deliver. This gives businesses access to executive and often C-suite level expertise without the cost and long-term commitment of a permanent hire. Fractional executives often work across multiple organisations. This also allows them to bring insights from different industries and operating environments into each engagement. At its core, the role focuses on helping organisations define, structure, and execute sustainability initiatives in line with broader business objectives. This typically includes: So the engagement of a Fractional CSO adapts to the business needs, and their involvement can be scaled up or down as needed. Because Scope 1 sits entirely within a company’s own operations, it is the most straightforward to measure and the most immediate to act on. What to look for in a Fractional CSO: skills and expertise Not every sustainability consultant is suited to an executive position. A Fractional CSO needs to operate at the same level as any senior leader in the business, someone who can sit alongside a chief executive officer and other senior executives, not just advise from the sidelines. That means technical expertise across ESG criteria, regulatory compliance, and sustainability projects, paired with the interpersonal skills to engage diverse stakeholders, from the board to external stakeholders like investors and regulators. Strategic thinking matters as much as subject knowledge. The role isn’t limited to reporting on relevant risks or tracking sustainability issues in isolation, it’s about integrating sustainability into how the business actually makes decisions. A good Fractional CSO connects environmental impact and social responsibility to commercial outcomes, playing a key role in shaping direction rather than simply documenting progress. The main benefits of a Fractional CSO A Fractional CSO gives businesses access to senior sustainability leadership without the cost, risk, or rigidity of a full-time hire. It allows organisations to move faster, align teams, strengthen reporting readiness, and build momentum across strategy, governance, and commercial outcomes. A Fractional CSO gives access to senior sustainability expertise without the cost of a full-time executive. Instead of paying a full salary, benefits, and recruitment costs, organisations engage the role based on hours or outcomes. This allows resources to be used more efficiently while still gaining C-suite level input. It also reduces financial exposure as there is no long-term commitment and engagement can adjust as needs change. Sustainability challenges often come with regulatory deadlines, stakeholder pressure, or transformation timelines. A Fractional CSO can start quickly. They can assess the situation, identify priorities, and move into execution without long onboarding periods. This contributes to faster progress on strategy, reporting readiness, and implementation. Sustainability does not sit in one department. It cuts across the organisation. A Fractional CSO aligns leadership around a shared direction. They connect sustainability to finance, risk, operations, and marketing. This creates consistency. Decisions follow a clear framework and priorities stay visible across teams. A Fractional CSO helps organisations identify ESG risks, prepare for regulatory change, and build the structures needed for compliance. They support reporting and disclosures by defining what needs to be measured, establishing data collection processes, and aligning outputs to recognised frameworks. A CSO also ensures information is consistent, decision-ready, and suitable for investor and regulatory scrutiny. This turns sustainability performance into clear, structured reporting that stakeholders can understand and trust. An important role of a Fractional CSO is to strengthen communication with stakeholders. That typically means translating complex sustainability data into clear insights. They also build internal capability. Through coaching, training, and structured frameworks, they help teams understand and execute sustainability initiatives. This creates the momentum organisations need to move forward with confidence and consistency. When a Fractional CSO makes sense A Fractional CSO may be most effective where focused, senior sustainability leadership can accelerate progress but full-time capacity is not required. It makes sense when ESG regulations are changing and require immediate attention. It may also fit during periods of transition, such as restructuring, acquisition, or growth, and when businesses are facing increased stakeholder expectations that need a structured response. Engaging a Fractional CSO also allows organisations to test CSO-level support before committing long term, and helps build internal capability for ongoing sustainability management. In these situations, a Fractional CSO provides targeted expertise without long-term commitment. How the role adapts across company size and sector There’s no single job description for a Fractional CSO, responsibilities vary depending on company size, sector, and how mature a business’s sustainability approach already is. A manufacturer managing a complex value chain and energy consumption across multiple sites has different needs to a services business focused mainly on governance and ESG reporting. Australian businesses in particular face a growing set of relevant regulations, and the right level of support depends on how exposed a business is to those requirements. For some organisations, this means a narrow, technical focus, improving energy efficiency, ensuring compliance, or preparing for a specific reporting deadline. For others, it means a broader mandate: embedding sustainability into company mission, culture, and long-term strategy across a diverse set of
Scope 1, 2 and 3 Emissions Explained: What They Mean and Why They Matter
You cannot manage what you cannot measure. For businesses serious about climate action, the Greenhouse Gas Protocol provides the framework to do both, organising all greenhouse gas emissions into three scopes that together cover a company’s full climate impact. Here is what each scope means, why all three matter, and how understanding them positions your organisation to manage risk, meet compliance obligations, and build a sustainability strategy that creates lasting business value. Scope 1 Emissions and the Framework That Defines Them The Greenhouse Gas Protocol Corporate Standard organises all emissions a business is responsible for into three scopes, providing organisations with a consistent and credible basis for measurement. Scope 1 is where most start: direct GHG emissions from sources the organisation owns or controls. These fall into four categories: Because Scope 1 sits entirely within a company’s own operations, it is the most straightforward to measure and the most immediate to act on. Scope 2 Emissions: What Your Energy Bills Are Really Costing the Climate Every time your business draws from the grid, someone else burns fuel to generate it. Scope 2 emissions come from purchased electricity, steam, heat, or cooling and while they physically occur at the power station, they are attributed to the organisation consuming the energy. The GHG Protocol Scope 2 Guidance sets out how organisations measure and report these figures consistently. For most businesses, purchased electricity is the biggest Scope 2 source. The greater the reliance on fossil-fuel-generated energy, the higher the figure. Switching to renewables and improving energy efficiency are the most direct ways to bring it down. Scope 3 Emissions: Where Most of Your Climate Impact Actually Lives Scope 3 covers all other indirect emissions across a company’s value chain. It is often the largest category and the hardest to control, but it is also where the biggest opportunities to reduce emissions sit. The GHG Protocol Corporate Value Chain (Scope 3) Standard provides the methodology organisations use to account for and report these emissions. Upstream emissions Are tied to everything that happens before goods or services reach your business: Downstream emissions Are tied to everything that happens after your products leave: For most organisations, Scope 3 is not just the largest emissions category, it is the one with the most untapped potential. Businesses with complex supply chains or sold products with high energy consumption during use will almost always find their greatest reduction opportunities here. Measuring All Three Scopes: Why Partial Reporting Is Not Enough The three scopes are mutually exclusive within a single inventory, meaning there is no double-counting. Together they cover everything: Many organisations start with Scope 1 and 2 because they are simpler to quantify. But stopping there means leaving the largest share of emissions unaccounted for and the greatest reduction opportunities untapped. An organisation’s power to drive change does not stop at its front door. Measuring and influencing emissions across the full value chain is where meaningful impact happens. A complete inventory covers all three scopes, and building one means defining the organisational boundary and systematically gathering fuel records, energy bills, fleet data, travel logs, and supply chain data. The GHG Protocol’s 15 Scope 3 categories provide the framework to make that process manageable. Scope 1, 2 and 3 Reduction Targets: Where Compliance Meets Competitive Advantage Addressing only Scope 1 and 2 leaves the majority of a company’s climate impact unmanaged. Real progress requires action across all three: Investors, regulators, and customers increasingly expect targets across all three scopes. The Science Based Targets initiative requires Scope 3 targets where those emissions represent 40% or more of total emissions, a threshold most companies exceed. In Australia, mandatory climate-related financial disclosures commenced 1 January 2025 under the Corporations Act 2001, with requirements extending to additional entities through to 2027. Compliance is the floor, not the ceiling. Organisations that go beyond minimum obligations and build a credible, full-scope emissions strategy are the ones that will attract investment, retain customers, and lead their industries. Learn how TGA helps businesses move from compliance to opportunity. Let’s Turn Your Emissions Data into a Strategy At The Growth Activists, we help Australian businesses measure their full emissions footprint, build credible inventories, and turn strategy into real progress across all three scopes. Whether you are just starting out or strengthening an existing approach, we are ready to move with you. Get in touch today to find out how we can support your carbon and climate strategy.
What Is ESG In Business?
Businesses today operate in a landscape where long-term success is measured by more than financial performance alone. Investors, customers, employees, and regulators are increasingly focused on not just what organisations do, but how they do it, and how they manage their environmental, social, and governance responsibilities. ESG stands for Environmental, Social, and Governance, three interconnected pillars that reflect how a business creates both qualitative and quantitative value, ultimately improving the bottom line. More than a reporting framework, ESG is a strategic approach to building resilient, purpose-driven organisations that are equipped to lead in an inclusive and regenerative economy. ESG Principles in Practice: Building a Comprehensive ESG Strategy Now that we have covered what ESG is and why it matters, here is how organisations translate that understanding into a strategy that drives real impact. Understanding ESG principles is one thing. Embedding them into business operations is another. A comprehensive ESG Strategy starts with materiality, identifying the ESG issues most relevant to the organisation, its stakeholders, and its industry. A manufacturing business may prioritise greenhouse gas emissions and energy efficiency, while a professional services firm may focus on governance, ethics, and workforce wellbeing. According to the IBM Institute for Business Value, organisations that embed sustainability into their operations had a 16% higher rate of revenue growth and were 52% more likely to outperform their peers on profitability. From there, organisations should: When organisations move from strategy to action, ESG becomes a platform for building resilience, driving sustainable growth, and strengthening organisational credibility. What Are ESG Factors? To fully understand what ESG means in practice, it helps to look at each pillar individually. ESG factors are the measurable criteria used to assess a company’s sustainability performance, risks, and long-term resilience. Together, these ESG dimensions provide a broader view of how organisations create long-term value (rather than just profit) while managing risk and responsibility. Understanding these factors is the first step toward building a business that is not just sustainable on paper, but genuinely resilient and ready to turn purpose into lasting impact. Why Is ESG Important for Businesses? Understanding what ESG is, is only part of the picture. Knowing why it matters is what drives organisations to act. Strong ESG performance can improve access to capital, as investors and sustainable funds increasingly use ESG criteria to guide investment decisions. Businesses with clear ESG commitments are often seen as better positioned for long-term resilience and value creation because they have considered short, medium, and long-term scenarios. Evidence also shows they are given a higher financial value during M&A deals, with a study in the International Journal of Finance & Economics finding that strong ESG performance consistently enhances bid premiums in corporate transactions. ESG also plays an important role in risk management. From climate-related disruptions to governance failures and reputational risks, organisations that proactively address ESG factors are better equipped to identify and manage potential challenges before they escalate. Understanding your exposure across Carbon and Climate and Supply Chain and Responsible Sourcing is a critical first step. At the same time, stakeholder expectations continue to rise. Customers, employees, investors, and communities increasingly expect businesses to operate responsibly, accountably, and ethically. Building a structured approach to Stakeholder Engagement helps organisations strengthen trust, engagement, and brand reputation over time. Regulatory requirements are also evolving rapidly, with mandatory ESG disclosures now expanding across Australia, the EU, UK, US, Canada, Japan, and beyond. Organisations that integrate ESG into their operations today will be better prepared for future compliance and reporting obligations. ESG Reporting and ESG Frameworks Once you understand what ESG means, the next step is understanding how organisations communicate their ESG performance formally. Transparent ESG reporting helps organisations communicate their performance, metrics, and progress to stakeholders, investors, and regulators. Choosing the right framework is a strategic decision that shapes how your organisation builds credibility and meets evolving disclosure obligations. Learn more about how TGA supports businesses with Reporting and Compliance. Several globally recognised frameworks guide ESG disclosure: A strong ESG strategy aligns with recognised reporting frameworks to ensure disclosures are credible, consistent, and transparent, turning compliance into a platform for continuous improvement. How to Implement ESG in Business Once you understand what ESG is, the next step is knowing how to put it into practice. Implementing ESG requires a structured approach aligned with your strategy, stakeholders, and long-term objectives. Start by assessing your current practices with an ESG Audit and Gap Analysis, then develop a clear ESG strategy that reflects your business goals and level of ambition. Engage leadership, employees, investors, and partners early to build alignment and accountability. Embed ESG into daily operations, governance structures, and decision-making, and track progress through ongoing monitoring and transparent reporting. ESG works best as a whole-of-organisation commitment. Building internal capability through ESG Education ensures your team is equipped to drive meaningful, lasting change from within. Take the Next Step Toward Sustainable Business ESG has become a strategic imperative that influences investment decisions, regulatory obligations, stakeholder relationships, and long-term value creation. At The Growth Activists, we support courageous organisations in turning ESG ambition into practical action. From ESG strategy and reporting frameworks to B Corp Certification, we work alongside businesses to integrate sustainability into everything they do. If you are ready to become a genuine force for good, get in touch with The Growth Activists today.
How Businesses Can Assess and Address Modern Slavery Risks in Their Supply Chains
Every year, an estimated 50 million people are living in modern slavery globally, often hidden within complex international supply chains. From clothing and electronics to raw materials, exploitation can exist at multiple tiers of production without visibility to end buyers. For Australian organisations, the Modern Slavery Act 2018 (Cth) requires large entities with annual consolidated revenue of at least AUD $100 million to report on the risks of modern slavery and the actions taken to assess and address those risks. While the Act is primarily a transparency framework rather than a punitive regime, it has driven significant improvements in governance, risk awareness, and ESG accountability. Leading organisations are now using modern slavery due diligence not only for compliance, but as a strategic tool to strengthen supply chain resilience, improve ESG performance, and enhance long-term business sustainability. What is Modern Slavery in Supply Chains? Modern slavery is a specific legal concept, distinct from broader worker exploitation. While poor working conditions, wage theft, and unsafe environments are serious concerns, modern slavery refers to situations where individuals cannot refuse or leave work due to threats, coercion, deception, or abuse of power. Behind every case are real people, often invisible within complex supply chains, whose freedom has been taken from them. Common forms include: Risk is highest in industries relying on migrant labour, temporary labour, and complex global sourcing, including agriculture, construction, cleaning services, garment manufacturing, electronics, and transport and couriering. Any sector where the hiring entity is at arm’s length from the business using the services carries elevated risk. Exploitation rarely occurs at the surface level. It tends to exist in Tier 2, Tier 3, or deeper, making it difficult to detect without structured due diligence. When issues are identified, businesses should work with suppliers to understand and remediate the problem. Cutting ties does not eliminate exploitation. It can worsen conditions for affected workers and push the problem further out of sight. The Modern Slavery Act 2018 (Cth): What Australian Businesses Need to Know The Modern Slavery Act 2018 (Cth) requires certain organisations to report annually on modern slavery risks within their operations and supply chains. The Act aims to strengthen corporate transparency, accountability, and responsible business practices. Who Must Report Under the Modern Slavery Act? Organisations must submit an annual Modern Slavery Statement if they: These statements are lodged on the Modern Slavery Statements Register, a public database maintained by the Australian Government. The register enables investors, regulators, customers, and civil society groups to assess how organisations are identifying and managing modern slavery risks. How to Assess Modern Slavery Risks in Your Supply Chain A meaningful modern slavery risk assessment requires a structured, proactive approach that goes beyond compliance. Businesses should focus on improving supply chain visibility, supplier engagement, and due diligence processes. Step 1: Map Your Supply Chain Supply chain mapping is the foundation of effective modern slavery risk management. This involves identifying: Many organisations are surprised not only by the complexity and reach of their supply chains, but by how many labour practices within them are invisible. A common example is the outsourcing of hiring to labour hire firms who further subcontract recruitment, creating layers of distance between the business and the workers it is responsible for. Step 2: Identify High-Risk Areas Once mapped, businesses should prioritise risk based on: Industry riskSectors such as agriculture, construction, hospitality, cleaning, and manufacturing typically carry higher exposure. Geographic riskRegions with weak labour laws, limited enforcement, or high migrant worker populations increase vulnerability. Supplier riskSmaller suppliers, informal operators, and those relying on labour hire arrangements may have weaker governance controls. Step 3: Conduct Supplier Due Diligence Supply chain audits are a widely accepted best practice for modern slavery due diligence. While not mandatory, they help: Key areas to cover include: Step 4: Analyse Risks and Take Action Data collection is only valuable when it drives action. Businesses should review supplier responses to identify: Where risks are identified, organisations should work with suppliers to: In higher-risk cases, escalation or supplier disengagement may be required. What Must a Modern Slavery Statement Include? A Modern Slavery Statement must meet mandatory requirements under the Act and is submitted to the Modern Slavery Statements Register, where it can be reviewed by stakeholders. It must include: Australia’s framework aligns with the UN Guiding Principles on Business and Human Rights (UNGPs), reinforcing global expectations for ethical supply chains. The Attorney-General’s Department also provides guidance and tools to support compliance. Beyond Compliance: Risks, Benefits and Strategic Value Modern slavery reporting is more than a compliance requirement it is an opportunity to strengthen governance, reputation, and supply chain resilience. What Happens If You Don’t Comply? While the Modern Slavery Act 2018 (Cth) does not currently impose financial penalties, non-compliance can still have serious consequences, including: This “name and shame” approach can result in reduced stakeholder trust, and increased scrutiny from investors and partners. Following the 2024 review of the Act, the Australian Government has agreed in principle to introduce civil penalties for non-compliance. For businesses, this is a matter of when, not if. Voluntary Reporting Organisations below the reporting threshold are encouraged to submit voluntary Modern Slavery Statements. This helps businesses: Voluntary statements are encouraged to align with the same reporting criteria to ensure consistency and comparability. Strategic and ESG Value Going beyond compliance delivers long-term business benefits, including: Ultimately, treating modern slavery risk as a strategic priority rather than a reporting obligation helps organisations build more resilient, ethical, and sustainable supply chains.
Mandatory Climate Reporting for Group 3 in Australia: What Organisations Need to Do Before FY2027-28
If your organisation qualifies as a Group 3 entity, Mandatory Climate Reporting will apply to financial years beginning on or after 1 July 2027. While this provides a longer runway than earlier cohorts, industry guidance consistently shows that building governance frameworks, emissions data systems, and reporting capability can take 12 months or more, depending on organisational maturity. Organisations that delay preparation risk entering their first reporting cycle with fragmented data, unclear ownership, and increased regulatory and assurance expectations. What is Group 3 Mandatory Climate Reporting in Australia? Group 3 mandatory climate reporting is the third cohort of Australia’s phased climate-related financial disclosure regime under the Australian Sustainability Reporting Standards (ASRS). It applies to organisations that meet specific reporting thresholds under the Corporations Act 2001 and are required to prepare general purpose financial reports. The reporting requirements are implemented through AASB S2 Climate-related Disclosures, which is aligned with IFRS S2 issued by the International Sustainability Standards Board (ISSB). Under this framework, Group 3 companies are required to include climate-related financial disclosures as part of their annual financial reporting. These disclosures cover governance, strategy, risk management, and metrics and targets relating to climate-related risks and opportunities. This is not voluntary ESG reporting. It is mandatory financial disclosure regulated under Australian accounting and sustainability reporting standards. For regulatory guidance on how these obligations are supervised, refer to ASIC Regulatory Guide 280 (RG 280) – Sustainability Reporting. Does your organisation qualify as a Group 3 entity? Group 3 entities are generally mid-sized organisations that meet at least two of the following three thresholds on a consolidated basis: Threshold Group 3 Criteria Consolidated Revenue $50M or more Consolidated Gross Assets $25M or more Employees More than 100 employees To be in scope, entities must also be required to prepare and lodge financial reports under Chapter 2M of the Corporations Act 2001. This means Group 3 captures a wide range of organisations, including mid-sized private companies, subsidiaries of larger corporate groups, manufacturing and industrial firms, service-based organisations, and supply chain and contracting businesses. Many organisations in this cohort may not consider themselves “large,” but they may still fall within scope under Australia’s mandatory climate reporting framework. Why this matters beyond compliance Mandatory climate reporting represents a structural shift in how climate risk is embedded within Australian financial reporting standards. Under AASB S2, climate-related risks must be assessed for materiality and, where determined to be material, integrated into governance, strategy, risk management, and financial disclosures. For some Group 3 entities, the outcome of that assessment may be that there are no material climate-related financial risks or opportunities for the reporting period. That does not remove the need for judgment. Organisations still need to explain how materiality was assessed, what was considered, and how that conclusion was reached. For Group 3 organisations, this creates significant strategic implications: Benefit What It Means for Your Organisation Investor and Stakeholder Confidence Demonstrates transparency and maturity in identifying and managing climate-related financial risks Board and Governance Accountability Establishes structured oversight of climate risk in line with regulatory expectations Operational Resilience Early identification of physical and transition risks helps reduce exposure to disruption and cost impacts Supply Chain Credibility Supports increasing requests for emissions and climate data from larger customers and partners Long-Term Value Creation Strengthens competitiveness, capital access, and overall market positioning Organisations that treat reporting purely as a compliance exercise risk missing these strategic advantages. For a deeper understanding of implementation requirements, download the Mandatory Climate Reporting Whitepaper or watch a recording of our Mandatory Climate Reporting webinar for insights into Group 2 readiness lessons and their relevance for Group 3 organisations. When does Group 3 mandatory climate reporting start? Group 3 mandatory climate reporting applies to financial years beginning on or after 1 July 2027. For organisations with a 30 June financial year-end, this typically means the first reporting period is FY2027–28. While this provides more lead time than earlier cohorts, organisations are expected under the phased implementation of the Australian Sustainability Reporting Standards to have key systems, governance structures, and data processes sufficiently developed before the start of their first reporting period. Early preparation matters even where an organisation is not yet sure whether climate-related risks or opportunities will prove material. Governance, data pathways, and assessment processes need to be in place early so materiality can be evaluated properly and explained clearly in the first reporting cycle. This includes: Preparation is not intended to begin at the commencement of the reporting period. Instead, organisations are expected to have the capability in place to support accurate reporting from the beginning of FY2027–28. What must Group 3 companies disclose under AASB S2? AASB S2 requires climate-related financial disclosures structured across four core pillars. For a comprehensive breakdown of the disclosure requirements and phased timeline applicable to Australian entities, refer to the Mandatory Climate Reporting: Sustainability Reporting Guide published by Pitcher Partners: Pillar What It Covers Governance Board and executive oversight of climate-related risks and opportunities, including decision-making structures and accountability Strategy Impact of climate-related risks and opportunities on business model, financial planning, and scenario analysis across short, medium, and long-term horizons Risk Management Processes for identifying, assessing, and integrating climate-related risks into enterprise risk management frameworks Metrics and Targets Disclosure of Scope 1 and Scope 2 greenhouse gas emissions (from the relevant reporting period), climate-related targets, and performance metrics Important note on Scope 3 emissions Scope 3 sits within the broader climate disclosure framework under AASB S2. However, for Group 3 entities, Scope 3 emissions are excluded from mandatory reporting in the first year. That does not mean organisations should ignore Scope 3. Many will still need to begin identifying likely value chain data sources and estimation pathways early, especially where emissions across the value chain are likely to be significant or where customers, suppliers, and other stakeholders are already requesting emissions data. The Growth Activists’ Carbon Accounting & Management service helps organisations establish the Scope 1, 2, and 3 data foundations required for assurance-ready climate reporting. Who is accountable
Group 2 Climate Reporting in Australia: What Organisations Need to Do Before FY2026–27
If your organisation qualifies as a Group 2 entity under the new Mandatory Climate-Related disclosure laws, it’s no longer a future requirement. It applies to financial years beginning on or after 1 July 2026, so for those businesses that work to a July-June financial year, it leaves limited time to prepare. Lessons learned from those Group 1s that have already started reporting are that building the governance frameworks, data systems, and assurance processes required takes 12 months. That window is narrowing. Organisations that have not yet started are likely to face compressed timelines, fragmented data, and increased regulatory risk in their first reporting cycle. What is Group 2 Mandatory Climate Reporting in Australia? Group 2 mandatory climate reporting is the second phase of Australia’s sustainability disclosure framework under the Australian Sustainability Reporting Standards (ASRS). It applies to organisations that meet specific financial, asset, and employee thresholds under theCorporations Act 2001 and is implemented primarily through AASB S2, which aligns with IFRS S2 issued by the International Sustainability Standards Board. Under this regime, Group 2 companies are legally required to publish structured climate-related financial disclosures (a ‘Sustainability Report’) as part of their annual reporting package. This is regulated financial disclosure, not voluntary ESG reporting. Does Your Organisation Qualify as a Group 2 Entity? Group 2 entities are mid-tier organisations that meet at least two of the following thresholds for two consecutive financial years, assessed on a consolidated basis: Threshold Group 2 Criteria Consolidated Revenue $200M or more, but less than $500M Consolidated Gross Assets $500M or more, but less than $1B Employees 250 or more employees The regime also applies to financial institutions, registered schemes, and registrable superannuation entities meeting equivalent size or reporting criteria under the Corporations Act. Why This Matters Beyond Compliance Mandatory Climate Reporting represents a structural shift in how climate risk is treated under Australian financial reporting standards. Under AASB S2, climate-related risks are recognised as material financial risks that must be integrated into governance, risk management, strategy, and financial disclosures, rather than treated solely within standalone sustainability reporting. For organisations that move early, this creates tangible competitive and stakeholder advantages: Benefit What It Means for Your Organisation Investor and Lender Confidence Demonstrates climate governance maturity to capital markets and financial partners that are increasingly focused on climate-related financial risk Board and Governance Accountability Establishes structured board oversight of climate risk in line with rising expectations from regulators and institutional stakeholders Operational Resilience Early identification of physical and transition risks helps reduce exposure to supply chain disruption, regulatory impacts, and asset stranding Supply Chain Readiness Preparation for Scope 3 disclosures strengthens visibility across the value chain and improves readiness for downstream reporting requirements Long-Term Value Creation Organisations with credible climate strategies are better positioned to attract talent, retain customers, and build competitive advantage Organisations that treat climate reporting purely as a compliance exercise will miss these advantages and face greater disruption when regulatory scrutiny intensifies. For a detailed breakdown of what early preparation looks like in practice, download the Mandatory Climate Reporting Whitepaper or watch a recording of our recent Mandatory Climate Reporting Webinar. When does Group 2 Mandatory Climate Reporting start? Group 2 mandatory climate reporting applies to financial years beginning on or after 1 July 2026 under the Australian Sustainability Reporting Standards (ASRS) and AASB S2. For entities with a 30 June financial year-end, this means FY2026–27 is typically the first reporting period in scope. Climate-related financial disclosures must be included within the annual financial reporting package alongside financial statements. While the first reporting period begins in FY2026–27, organisations are expected to have governance structures, data collection processes, and internal controls in place to support accurate reporting from the start of that period. With reporting now imminent, organisations that have not yet begun preparation face significantly compressed implementation timelines ahead of their first mandatory reporting cycle. What Must Group 2 Companies Disclose Under AASB S2? AASB S2 requires climate-related financial disclosures structured across four key areas, integrated into an entity’s annual financial reporting: Pillar What It Covers Governance Board and executive oversight of climate-related risks and opportunities, including accountability structures and decision-making processes Strategy The impact of climate-related risks and opportunities on business model, strategy, and financial planning, including scenario analysis across short, medium, and long-term horizons Risk Management Processes for identifying, assessing, and integrating climate-related risks into enterprise risk management frameworks Metrics and Targets Scope 1 and Scope 2 greenhouse gas emissions must be disclosed from the first reporting period, along with climate-related targets and performance metrics. The more difficult Scope 3 emissions should be prepared for early, with disclosure expected from the second reporting year. Although Scope 3 disclosure is expected to begin in the second reporting year, organisations should begin establishing data collection processes early. Value chain emissions are typically the most complex to map and measure, and delayed preparation can create unnecessary pressure in later reporting cycles. With FY2026–27 approaching for Group 2 entities, early preparation is increasingly important to support data readiness, governance alignment, and assurance requirements as the reporting framework matures. Who Is Accountable Inside Your Organisation? Climate-related financial reporting under AASB S2 is not solely the responsibility of the sustainability team. It requires cross-functional ownership across governance, finance, risk, strategy, and operations, with clearly defined accountability across the organisation. Mostly, responsibility falls to existing reporting teams, which often falls under the CFO and finance team’s remit. The Growth Activists works with leadership teams across these functions to establish clear ownership structures before the reporting period begins, as unclear accountability is one of the most common gaps identified in climate reporting readiness assessments. Function Key Responsibilities Board Oversight of climate-related risks and opportunities, approval of governance structures, and accountability for disclosures CEO and Executive Leadership Integration of climate considerations into business strategy and capital allocation, and overall organisational oversight CFO and Finance Integration of climate-related data into financial reporting, ensuring data controls, and supporting audit and assurance processes Risk Integration of physical and transition climate risks into enterprise
ESG in 2026: The 5 things you need to get right
ESG is noisy right now. Not because it is going away, but because it is growing up. The expectations are sharpening. The commercial stakes are rising. And the work is moving from sustainability teams into finance, risk, procurement, operations and the boardroom. Here we unpack the five priorities shaping ESG in 2026, and the moves organisations can make now to stay ahead. Economic Essentials The economic case has shifted. The question leaders are asking is no longer what is the cost of transition. It is what is the cost of delay. Deloitte Access Economics modelling shows that transitioning to net zero by 2050 adds $435 billion to Australia’s GDP^. The same modelling cites a $370 billion GDP boost under a 75% emissions reduction target by 2035, with Australia $500 billion better off by 2050. Then there is the capital signal. Responsible investment and sustainable finance are scaling quickly. Current estimates are that the sustainable finance market was about USD 754 billion in 2024 and could reach about USD 2.59 trillion by 2030*, with around 23% annual growth through 2030. What it means is simple. Capital is increasingly pricing performance, not promises. What to do now Regulation Rising Mandatory reporting is not just more work. It is a reset of accountability. Sustainability reporting is already mainstream for the world’s largest companies, with 96% of the G250 reporting, and more than 300 new global regulations introduced since 2019. The direction of travel is clear, even as some jurisdictions adjust timelines and scope. In Australia, mandatory climate reporting under the Corporations Act commenced from 1 January 2025 for the largest organisations, with a phased rollout beginning with $500 million plus entities as the first cohort. The hardest part is not finding the data. It is building governance and capability so disclosures are credible, consistent and ready for assurance. What to do now Systemic Synthesis Fragmented ESG activity will not survive 2026. Systems will. Only 6% of businesses have full traceability in their supply chains. That means most organisations still do not have clear visibility into what is happening at the start of their value chain. At the same time, procurement is tightening. 81% of global trade professionals now use ESG criteria as a primary filter when selecting suppliers. ESG data is becoming a gatekeeper for revenue. This is why the concept of systemic synthesis matters. Instead of collecting ESG data in fragments for different demands, organisations need to stitch it into a single intelligence system that can serve multiple needs across reporting, due diligence, procurement, customer transparency and innovation. Digital Product Passports are one clear example of where this is heading. They have been scheduled to become mandatory in the EU for batteries and textiles from 2027, moving provenance from static documentation to machine readable cradle to grave transparency. They also open circular opportunities like resale authentication, repair enablement and even royalties on second hand transactions. What to do now Value Velocity This is where ESG flips from defence to growth. 2026 is a tipping point where ESG must move from cost of compliance to a rapid driver of value. Market leaders are using sustainability as a performance engine, strengthening enterprise value, winning procurement, and building trust that translates into commercial momentum. Governance maturity is part of the valuation signal now. Recent evidence proves that two thirds of dealmakers pay premiums~ for strong ESG governance, with valuation uplifts of up to 10% when governance resilience can be proven. This is why we challenge teams to do more than report. We want ESG to be embedded and bankable, and we want it to show up in how the business is run. What to do now Transformative Tech AI can be a strategic enabler for ESG. It can process large datasets, support real time monitoring, and make Scope 3 work more manageable. It can also free teams from retrospective reporting so they can spend more time on strategy and transformation. But AI only helps if governance leads. Setting up the guardrails that matter most: accuracy, data ethics and ownership, bias, auditability, and the energy-consumption realities of advanced technology in the context of decarbonisation goals. The opportunity is real. The risk is also real. The organisations that lead will treat AI as part of ESG governance, not separate from it. What to do now Capability is the multiplier ESG training is still fragmented, especially for people outside finance. If you want ESG to stick, build capability across finance, procurement, operations, marketing and sales, not only within the sustainability team. If 2026 is the year ESG becomes normal business, the work is not doing more. It is doing it smarter, with stronger governance, better systems, and clearer value. Contact us to find out what this might look like for your organisation.
How to Achieve B Corp Certification: Understanding the Requirements and Process of the New B Corp Standards
Becoming a Certified B Corporation Becoming a Certified B Corporation is one of the most credible ways for businesses to demonstrate strong social and environmental performance. Through the B Corp certification process, companies are assessed against rigorous B Corp standards developed by B Lab, ensuring they meet high standards of accountability and transparency. As expectations around responsible business continue to rise, many organisations are seeking credible ways to assess and strengthen their social and environmental performance. B Corp certification provides an independent, globally recognised standard that enables companies to formalise their commitments and demonstrate measurable accountability and positive impact. The new B Corp standards, developed by B Lab, represent a deliberate shift to raise the bar for certification requirements. These updated standards respond to increasing expectations from regulators, investors, employees, and communities for; more transparent accountability more consistency ongoing improvement stronger assurance alignment with global regulations and compliance. Under the previous framework(1.6 version B Corp), companies were required to achieve at least 80 out of 200 points on the B Impact Assessment. Under the new updated standards (Version 2.1), to achieve Certified B Corporation status, businesses must demonstrate meaningful action and measurable progress across mandatory impact areas. B Corp certification is not simply a badge. It reflects participation in a global community of businesses that are committed to using their commercial activities to create positive social and environmental outcomes. Certified B Corps must integrate impact considerations into their operations, governance, and decision-making. A defining feature of B Corp certification is the requirement for companies to consider the interests of all stakeholders, not just shareholders and employees. This means embedding accountability for people and the planet into governance structures, alongside financial performance. Long-term business resilience depends on responsible practices that create value for stakeholders, employees, customers, communities and the environment. By becoming a Certified B Corporation, businesses join a respected global network of companies committed to better business, shared learning, collective action and continuous improvement. B Lab: Empowering Companies to Balance Profit and Purpose B Lab, the nonprofit organisation behind the B Corp Certification, was founded in 2006 with the mission to transform the global economy into a force for good. As a non profit organisation, B Lab develops the tools, metrics and governance frameworks that enable companies to meet high standards of verified social and environmental performance. Through the B Corp movement, B Lab supports businesses that seek to balance profit with purpose, helping them create measurable positive impact for people and the planet. Companies that achieve Certified B Corp status become part of a global network of organisations committed to building a more inclusive and regenerative economic system. B Lab champions the idea that being the best in the world isn’t enough; businesses should also be the best for the world. Preparing for the Certification Process The new B Corp standards are designed to assess whether social & environmental impact is built into how a business operates rather than whether everything is fully developed at certification. A commitment to improve over time, not perfection on day one. Businesses are not expected to have every policy or initiative fully mature at the time of certification. Instead, B Lab looks for clear evidence of intent, credible systems, and a commitment to improving social and environmental performance over time. For businesses in Australia and Aotearoa New Zealand, becoming a Certified B Corporation is a strategic process, not a compliance exercise. It requires a structured review of how your organisation operates today and will operate over the next 5 years across these 7 impact areas: stakeholder governance fair work climate action environmental stewardship justice, equity diversity and inclusion human rights government affairs So, what is required to become a B Corp? The certification process involves a detailed assessment of your company’s impact, policies, and management systems. Rather than ticking boxes, businesses must apply a holistic ESG lens that balances purpose and profit while supporting long-term resilience. This guide explains how to become B Corp certified, covering eligibility requirements, completion of the B Impact Assessment, verification, certification, and the ongoing improvement expected over time, with practical insights at each stage of the journey. Understanding the Requirements to Become a B Corp What is Required to Become a B Corp? To become a B Corp, companies must meet specific B Corp requirements that demonstrate a commitment to verified social and environmental performance. These requirements ensure businesses operate with strong governance, transparency, and legal accountability. To achieve Certified B Corporation status, companies must: Operate for-Profit Entity: To be eligible for B Corp certification in Australia or Aotearoa New Zealand, your business must be a for-profit organisation and is legally structured in a way that meets B Lab’s governance and accountability requirements. Meet Eligibility Requirements: Your company must be legally incorporated, in operation for at least 12 months, and comply with local and national laws. Industry alignment: Your business operates in an industry that aligns with the Theory of Change and mission of the B Corp movement that businesses can be a force for good and transform the economy into a more inclusive, equitable, and regenerative system. B Impact Assessment (BIA) Alignment: Under the new B Corp standards, certification is no longer based on reaching a points threshold. Instead, companies must meet all applicable Foundation Requirements and all Year 0 (Y0) minimum requirements across the seven mandatory Impact Topics, tailored by company size, sector and context). Meeting these B Corp requirements ensures businesses meet high standards of accountability and transparency while demonstrating measurable environmental impact and social value. The B Impact Assessment The B Impact Assessment (BIA) is the core impact assessment used by B Lab to evaluate a company’s social and environmental performance. It measures a company’s impact across governance, workers, communities, customers, and environmental stewardship. Under the updated B Corp standards, the assessment has shifted from a simple points-based model to a performance-based framework. Companies must now demonstrate that they meet all relevant performance requirements rather than accumulating points. The assessment is structured around
A Practical Standard for High Quality Stakeholder Engagement
Discover how businesses can unlock sustainability through strategy, ESG integration, and purpose-led action. Learn how to turn sustainable goals into long-term business success.
How Much Does B Corp Certification Cost?
Discover how businesses can unlock sustainability through strategy, ESG integration, and purpose-led action. Learn how to turn sustainable goals into long-term business success.