How to Comply with Australia’s Climate Reporting Laws

Everything To Know About Australia's Mandatory Climate Disclosure Laws 

Australia has entered a new era of mandatory climate disclosure.  

As of 1 January 2025, large companies and financial institutions must produce annual climate-related financial disclosures as part of their annual reports.  

This requirement is under the Australian Sustainability Reporting Standards (ASRS), aligned with global frameworks like the ISSB’s climate disclosure standards and the TCFD recommendations.  

Businesses that fall under the thresholds will be phased into compliance over the next few years, for example, companies with revenue above $500 million must comply from 2025, those with $200 million from 2026, and smaller firms by 2027.  

Even if your company is not in the first wave, preparations should start now.  

This article outlines practical steps Australian companies should take immediately to get ASRS-compliant, with a focus on digital infrastructure, automation, data assurance, and emissions traceability. The goal is to move beyond basic checkbox compliance and build a forward-thinking climate reporting capability that stands up to scrutiny and delivers business value. 

Understanding the New Climate Disclosure Obligations 

Begin with a clear grasp of what the law requires and how it applies to you. Determine when your organisation must start reporting under the mandatory regime and whether you meet the size or revenue thresholds for early phases.  

If you’re a large listed or private company (e.g. ≥$500M revenue or ≥500 employees), your first sustainability report covering climate risks will likely be due alongside your FY2025 annual report.  

Medium and smaller companies have slightly more time, but no one is exempt in the long run. Also, note that if you supply or partner with in-scope companies, you may face indirect pressure to provide climate data. 

Next, review the ASRS (AASB S2) climate reporting standard in detail. These standards mirror international requirements, meaning you will need to disclose: governance of climate risks, strategic impacts of climate change on your business, how you manage those risks, and detailed metrics and targets (including greenhouse gas emissions for Scope 1, 2, and 3).  

Ensure you understand the level of detail required. For instance, scenario analysis of future climate impacts and disclosure of transition plans are encouraged, and board directors must attest that the report meets the standards.  

In fact, Australian directors will need to sign a declaration of compliance, with regulatory relief only in the initial years for certain forward-looking statements and Scope 3 data. This underscores that climate reporting is being taken as seriously as financial reporting. 

Recommended Action: Conduct a gap analysis. Compare your current sustainability reporting (if any) against the new ASRS requirements.  

Identify gaps in data availability, process, and skills. For example, do you currently measure all Scope 1 and 2 emissions? Have you assessed climate-related risks enterprise-wide? Is there board oversight on climate matters? This assessment will reveal where to focus your efforts first.  

Use the gap analysis results to develop a roadmap with a clear timeline and resource plan to achieve compliance. Assign executive responsibility for this program – many companies form a cross-functional climate disclosure working group led by finance or sustainability executives to drive the project. 

Build Robust Digital Infrastructure for Climate Data 

Accurate climate disclosure hinges on data – potentially a lot of data from across your operations. Manual spreadsheets and ad-hoc processes will be overwhelmed by the complexity of tracking emissions, climate risks, and performance metrics.  

Now is the time to invest in a centralised digital infrastructure for sustainability data. This means setting up systems to collect, store, and manage climate-related information much like you would financial data. 

Start by evaluating dedicated sustainability reporting software or upgrading existing enterprise systems to handle climate data. A robust platform will allow you to centralise carbon emissions and climate risk data from different business units into one source of truth.  

It should support the ASRS/ISSB reporting format out-of-the-box, making it easier to align your data capture with what regulators expect. For example, an ESG management system can map your emissions data to the categories required by AASB S2 and handle the calculations according to the GHG Protocol automatically. 

Look for tools that facilitate data integration. This might involve connecting utility systems (for energy use), ERP systems (for production or travel data), and other relevant databases to the central platform. Modern sustainability software can often plug into these data sources via APIs or scheduled imports.  

The objective is to reduce manual data entry and ensure every relevant data point (e.g. electricity usage, fuel consumption, waste volumes, etc.) flows into your climate database continuously. For instance, Carbon Central automates and unifies data for emissions reporting, eliminating silos. By establishing this digital backbone early, you set yourself up to handle the increasing data demands as reporting expands in scope. 

Keep in mind scalability and flexibility. The system you implement should not only handle carbon emissions but also other ESG data, since future standards may require reporting beyond climate data. A cloud-based solution is ideal for scalability and collaboration across teams. Ensure that the platform provides user access controls, so the right people (sustainability team, finance, auditors, etc.) can input and review data securely. 

Recommended Action: Implement or upgrade an ESG data platform. Prioritise solutions that can streamline data collection and centralise information from multiple sources. Real-world example includes using IoT sensors on factory equipment to feed energy usage data directly into your system. The more you digitise and integrate now, the less scramble there will be when reporting deadlines arrive. 
 

Automate Data Collection and Emissions Calculations 

Manual processes are error-prone and time-consuming, two things you cannot afford when producing regulated climate disclosures. Automation is key to efficient and reliable reporting. Identify areas in your data collection and calculation process that can be automated or systematically streamlined. 

For emissions data, especially, consider automation tools. For instance, instead of someone manually converting electricity kilowatt-hours to tons of CO₂ using spreadsheets, use software that automatically applies the correct emissions factors and does the math for you in real time. By automating these calculations, you improve accuracy and free up your team to focus on analysis rather than number-crunching. 

Workflow automation can also help in gathering data across departments. Set up scheduled reminders or data pipelines for each data owner in your organisation. For example, an automated workflow could email facility managers quarterly to input their site’s energy usage into a centralised form, which then feeds into your master database.  
 

Some companies use robotic process automation (RPA) bots to pull data from disparate legacy systems that don’t have easy integration capabilities. Others integrate directly with suppliers’ systems (where feasible) to receive emissions data. The goal is to reduce the reliance on manual data gathering. As a bonus, automation often catches anomalies – if a data point suddenly looks off, the system can flag it, prompting a human review. 

Leading organisations are also exploring AI-driven tools for sustainability reporting. These can help in data validation and even in drafting parts of the disclosure report by analysing data trends. While AI isn’t a replacement for thorough expert review, it can accelerate the grunt work of compiling reports. 

Recommended Action: Leverage technology to automate repetitive tasks. Use a sustainability reporting platform to handle emissions calculations, data consolidation, and report generation. For example, Australian companies are utilising AI-powered tools like Carbon Central to automate emissions data gathering and crunch numbers in alignment with AASB S2, thereby reducing manual effort and improving data accuracy.  

Look into integrations your chosen software provides – Carbon Central can tie into utility providers or IoT sensors to automatically pull in data. Every process you automate now is one less potential bottleneck during the intense reporting season. 

Ensure Data Quality, Assurance and Governance 

Climate disclosures will be scrutinised by investors, regulators, and possibly auditors, so data quality and governance are non-negotiable. Assurance of the reported information – whether through internal controls or external audit – is crucial to build credibility.  

In Australia, full external audit (reasonable assurance) of sustainability reports will be mandatory by 2030, and components of the report will likely face phased assurance requirements before then. Smart companies will start adopting assurance practices early rather than waiting until the last minute. 

Begin with strong internal data governance. Establish clear ownership for each part of the climate report.  

For example, assign your Head of Sustainability to own the GHG inventory data, your Risk Manager to own the climate risk register, and finance/controller team to oversee the overall compilation to ensure it ties in with financial reporting timelines. Implement controls and validation checks on data inputs.  

This can be as simple as setting up logic in your data system to reject obviously incorrect entries (e.g. a negative fuel usage number) or as involved as having a secondary review process where one team member verifies data entered by another. Document your methodologies for things like emissions calculations and scenario assumptions – this documentation will be invaluable when auditors or regulators ask how you arrived at your figures. 

Consider performing dry-run audits. Once your sustainability report is drafted (even in the first year when external assurance isn’t yet required), have an internal audit team or third-party consultant review it for accuracy and completeness.  

They should trace a sample of figures back to source data to ensure everything is traceable and verifiable. A good digital system will assist here by maintaining audit trails – every data point should link back to its origin (meter reading, invoice, database record, etc.) along with timestamps and who entered it.  

Also engage your Board and executives in the assurance process. Given that directors must sign off on these disclosures, they should be briefed on the rigor of the preparation process.  

Many companies are conducting board training sessions on climate reporting to ensure top leadership understands the content and implications of the sustainability report. Build climate reporting into your enterprise risk management and governance framework.  

This might involve updating board charters to include sustainability oversight or forming a board sub-committee for ESG. When leadership is accountable and knowledgeable, the tone is set for high-quality disclosures. 

Recommended Action: Embed quality checks and seek independent validation. Treat your climate data with the same discipline as financial data. Use software features to enforce data integrity (for instance, audit trails and validation rules that flag anomalies). 

Before finalising reports, have an independent party review key elements – for example, get an external consultant to recalibrate your emissions calculations or have an auditor perform limited assurance on your greenhouse gas numbers. Identifying and fixing issues now will save headaches later when assurance is legally required.  

Additionally, maintain meticulous documentation of assumptions (emission factors used, climate scenarios considered, materiality assessments, etc.), as this documentation will be part of what auditors examine. By instituting a robust assurance process, you not only comply with confidence but also build trust with stakeholders who can see that your disclosures are reliable. 

Achieve Emissions Traceability and Scope 3 Coverage 

One of the toughest parts of climate disclosure is accounting for Scope 3 emissions – the indirect emissions up and down your value chain. For many businesses, Scope 3 makes up the bulk of their carbon footprint (often more than 70%, and in some cases an order of magnitude larger than direct emissions).  

Tackling this requires traceability: the ability to track emissions back to their source and have a clear line of sight on how they were calculated. Companies need to develop processes and partnerships to get the necessary data and ensure its reliability. 

Start by mapping out your emissions sources across Scope 1, 2, and 3. Scope 1 (direct fuel combustion, company vehicles, on-site energy) and Scope 2 (purchased electricity) are within your control, so ensure you have meters or invoices capturing all these usage points.  

Implementing traceability here might mean linking each emissions entry to a facility ID or meter ID in your data system, so you know exactly which site and period a given CO₂ figure comes from. This level of detail helps in both managing the emissions and proving their accuracy if questioned. 

For Scope 3, identify the most significant categories for your industry – e.g. for retail, product supply chain and transportation; for financial institutions, financed emissions; for manufacturing, purchased goods and materials, etc. Develop a strategy for each major category.  

Supplier engagement is critical: you may need to reach out to suppliers to gather emissions data or at least activity data (like the amount of materials or services you purchased from them) to use in your calculations. Providing suppliers with templates or access to a portal can streamline this data collection. Some companies are incorporating clauses in procurement contracts requiring key suppliers to report environmental data. Others use third-party networks or databases where suppliers can upload their carbon information for customers to access. 

Where getting primary data is not feasible, use standard methodologies and tools to estimate emissions, but do so in a traceable manner. For example, if you must estimate emissions from use of sold products, document the calculation clearly (energy rating of product, usage hours assumed, emission factor applied, etc.).  

Use reputable emission factor sources, the Australian National Greenhouse Accounts Factors or global ones like DEFRA, to ensure your numbers are credible. By doing this, any reviewer can follow the trail from a final Scope 3 number back to the underlying assumptions or supplier data. 

Technology for traceability: Consider tools designed for supply chain emissions tracking. Carbon Central uses blockchain and secure ledgers to record emissions data at each step of a supply chain, preventing tampering and providing a clear chain-of-custody for the data.  

At minimum, ensure your data platform tags each data point with metadata (source, date, method of collection). The concept is like financial auditing – every figure in your climate disclosure should be backed by evidence. 

Recommended Action: Improve emissions traceability and completeness. Make an actionable plan to capture Scope 3 emissions from your suppliers and partners.  

For instance, if you are in manufacturing, start engaging your top 10 suppliers by emissions impact – work with them to get actual energy usage data related to your orders, or provide them an easy mechanism to share carbon data. Utilise software that supports supplier data collection and built-in emissions factors to fill gaps.  

You may also adopt unique identifiers for data (like invoice numbers or shipment IDs) so you can later audit where a particular emissions figure came from. The result should be a transparent trail for each material emission in your report, boosting confidence that nothing is double-counted or unsubstantiated. 

Integrate Climate Factors into Strategy and Operations 

Preparing for mandatory disclosures shouldn’t happen in a vacuum. The intent of these laws is to drive businesses to truly consider climate risks and opportunities as part of their core decision-making. Embrace this by integrating climate considerations into your strategy, risk management, and operations. This not only ensures compliance but future-proofs your business. 

In practical terms, integration means incorporating climate risk into your enterprise risk management process. Identify your material climate-related risks (e.g. physical risks like extreme weather impacting facilities, transition risks like carbon pricing or changing customer preferences) and ensure they have owners and mitigation plans.  

These should be discussed at management and board level, just like finance or operational risks. Many companies find that conducting a TCFD-style scenario analysis is a useful exercise here – it forces you to consider best-case and worst-case climate futures and how your business would fare.  

The insights from this analysis can guide strategic pivots and investments (for example, investing in supply chain resilience or diversifying product offerings if a high-carbon line is at risk). 

On the opportunity side, identify how stronger climate performance can be a competitive advantage. Compliance will require setting climate-related metrics and targets, such as emissions reduction goals. Tie these targets to your business strategy – for instance, a target to source 100% renewable energy by 2030 could align with an operational cost-saving strategy if managed well.  

Link managers’ KPIs or incentives to achieving these climate targets to embed accountability. When climate goals are part of the business plan, meeting reporting requirements becomes a byproduct of executing your strategy, rather than an external burden. 

Additionally, evaluate your digital infrastructure and automation investments (from earlier steps) considering strategic needs. The data you gather for compliance can unlock insights. Use analytics on your climate data to find inefficiencies or high-risk areas. For example, data might show one product line causes outsised emissions – an insight that could spur innovation for a lower-carbon alternative, opening a new market opportunity.  

Forward-thinking companies leverage the effort spent on compliance to drive improvements: they use the refined data to cut costs (through energy efficiency), to innovate (developing greener products), and to enhance brand value (by marketing their sustainability leadership). 

Recommended Action: Align climate compliance with business strategy. Treat your mandatory sustainability report as more than a legal requirement – use it as a strategic tool.  

For example, if you must report climate-related opportunities, work with R&D and strategy teams to identify new products or services that a low-carbon future will demand.  

If you must disclose a transition plan toward net zero, ensure it is integrated with your financial planning and capital expenditure decisions. By embedding climate into the fabric of company strategy, you not only make reporting easier (since the information flows naturally from what the business is doing), but you also position the company to thrive in a low-carbon economy.  

Conclusion 

Australia’s mandatory climate disclosure regime is a catalyst pushing businesses to upgrade their data systems, improve risk management, and ultimately operate more sustainably.  

Companies that respond proactively will find themselves not only in full compliance but also better informed and better equipped to compete in a climate-conscious marketplace.  
By investing in digital infrastructure and automation, you reduce the burden of reporting and gain timely insights.  
 
By enforcing strong assurance and traceability, you build trust in your disclosures and strengthen decision-making with reliable data.  
 
And by integrating climate considerations into strategy, you turn compliance into an opportunity for innovation and resilience. 

The message for Australian companies is clear: prepare now. Those who treat the new climate reporting laws as an urgent project – with concrete actions, the right tools, and a forward-thinking mindset – will navigate the ASRS requirements with confidence.  

In doing so, Australian companies will not only satisfy regulators and investors but also position your business as leaders in the transition to a sustainable future. Compliance and competitive advantage can go hand in hand, if you take the right steps today. 

  
Get ahead of Australia’s climate reporting requirements with Carbon Central 
 
From real-time emissions tracking to audit-ready reporting, we help you stay compliant while turning climate data into business value. 

Want to see it in action? Contact us to book a demo and discover how Carbon Central can support your reporting journey.