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:
- Climate governance frameworks
- Emissions data collection systems
- Climate risk identification processes
- Internal reporting and control systems
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 inside your organisation?
Climate-related financial reporting under AASB S2 is not limited to sustainability teams. It requires cross-functional accountability across governance, finance, risk, strategy, and operations.
| Function | Key Responsibilities |
| Board | Oversight of climate-related risks, governance approval, and disclosure accountability |
| CEO & Executive Leadership | Integration of climate into strategy and capital allocation decisions |
| CFO & Finance | Integration of climate data into financial reporting and audit readiness |
| Risk | Embedding climate risks into enterprise risk management systems |
| Strategy | Scenario analysis and long-term business resilience planning |
| Sustainability / ESG | Emissions measurement systems and data coordination across Scope 1, 2, and 3 |
A lack of clearly defined ownership across these functions is one of the most common gaps in early-stage climate reporting readiness, particularly for mid-sized organisations preparing for Group 3 requirements.
How Group 3 companies should prepare: 5 key steps
Based on readiness patterns across Australian organisations, effective Group 3 preparation typically involves five coordinated actions:
1. Conduct a climate reporting gap assessment
Assess current capability against AASB S2 requirements, including governance structures, emissions data systems, risk management processes, and reporting capabilities. This establishes a baseline and identifies priority gaps before the first reporting period.
2. Build emissions data capability
Establish reliable systems for measuring Scope 1 and Scope 2 greenhouse gas emissions. Begin identifying and mapping Scope 3 data sources where relevant, particularly where value chain emissions may be material or requested by stakeholders.
3. Embed climate into governance structures
Define clear board and executive accountability for climate-related risks and opportunities, and establish governance structures that support oversight and reporting obligations under AASB S2.
4. Integrate climate risk into enterprise risk management
Climate-related risks should be incorporated into existing enterprise risk frameworks, including physical and transition risks, rather than being managed as a standalone function.
5. Prepare for assurance requirements
Climate-related disclosures will be subject to phased assurance under Australian auditing and assurance standards. Establishing assurance-ready documentation, internal controls, and data governance processes early helps reduce compliance risk and supports smoother future audit processes.
Assurance requirements: what Group 3 needs to know
Australia’s mandatory climate reporting framework includes external assurance requirements, with standards overseen by the Auditing and Assurance Standards Board (AUASB).
Assurance will be introduced in a phased manner, with initial requirements expected to involve limited assurance over selected climate-related disclosures, increasing in scope over time as reporting practices mature.
To prepare for these requirements, organisations should establish:
- Assurance-ready documentation systems
- Reliable data governance processes
- Internal controls over climate-related financial data and emissions reporting
Early preparation significantly reduces assurance challenges and helps ensure smoother compliance during the initial reporting cycles.
Next steps: what Group 3 organisations should do now
Although Group 3 mandatory climate reporting begins for financial years starting on or after 1 July 2027, the implementation window is already open. Organisations are expected to use this time to build governance structures, data systems, and reporting processes ahead of their first reporting period.
Delaying preparation can lead to higher implementation costs, gaps in emissions data, misalignment between governance and operations, and greater difficulty in meeting assurance expectations. These risks are commonly identified in climate reporting readiness assessments and tend to increase when organisations leave preparation too late.
AASB S2 requires more than reporting at a point in time. It depends on having underlying systems in place, including clear accountability, reliable emissions data processes, and integrated reporting controls. The decisions made now around governance, systems, and ownership will determine whether climate reporting becomes a structured process or a disruptive compliance exercise.
The Growth Activists supports organisations preparing for Group 3 requirements through gap assessments, governance design, emissions data systems, and reporting and assurance readiness. Download the Mandatory Climate Reporting Whitepaper or watch a recording of our Mandatory Climate Reporting webinar to understand how Group 2 readiness insights apply to Group 3 preparation.
