Now is the time to take action, not panic.
Australia’s long-anticipated sustainability reporting framework becomes active from 1 January 2025 for the first in-scope organisations.
Here’s what you need to know to help navigate this new landscape.
Understanding Australian Sustainability Reporting Standards
The Australian Parliament mandates climate-related financial disclosures in accordance with ASRS for specific entities. Here’s how the requirements apply:
- Group 1: The largest entities and National Greenhouse and Energy Reporting (NGER) scheme reporters above the publication threshold. This includes large organisations that meet at least two out of three size thresholds: over 500 employees, more than $1 billion in consolidated gross assets, or over $500 million in consolidated revenue.
- Group 2: Comprises the second-largest entities, asset owners, and other NGER reporters not captured in Group 1. The large entities in this group must meet at least two out of three size thresholds: over 250 employees, $500 million in assets, or $200 million in revenue. Additionally, asset owners where the value of assets at the end of the financial year (including controlled entities) is equal to $5 billion or more also fall under this category.
- Group 3: This group includes all other in-scope entities, particularly those with over 100 employees, $25 million in assets, or $50 million in revenue.
The mandatory climate disclosures (AASB S2) become applicable for Group 1 entities from January 2025.
Companies that have prepared by aligning themselves with the Task Force on Climate-related Financial Disclosures (TCFD) framework will benefit from investing in sustainability early. For them, the new standards will be less of a scramble and allow for a smoother transition. For companies that have yet to take steps to prepare for measuring and managing their sustainability exposure, they are at risk of falling behind when these standards become mandatory.
Key Components of the Australian Sustainability Reporting Standards
Originally focused solely on climate-related disclosures, AASB S1 now encompasses broader sustainability requirements. While currently voluntary, adopting ASSB S1 can position companies as leaders in sustainability reporting, providing a competitive edge. Additionally, global trends show voluntary sustainability oversight can quickly shift to regulatory requirements, so preparing your business today not only protects market share, but also future proofs your business.
AASB S2 remains focused on climate-related disclosures and is mandatory for all organisations falling within the defined groups. AASB S2 aligns with the International Sustainability Standards Board’s (ISSB) standards and the TCFD recommendations, requiring companies to report on Scope 1, Scope 2, and eventually Scope 3 emissions.
Preparing for the Complexity of Scope 3 Emissions
Reporting on Scope 3 emissions, which include indirect emissions throughout the supply chain, is one of the most challenging aspects of the new Australian Sustainability Reporting Standards. This involves understanding and prioritising emissions sources, gathering credible data, and applying appropriate calculations. In the first year of reporting, companies are required to measure Scope 1 and Scope 2 emissions (e.g. direct emissions and purchased energy). Scope 3 emissions become mandatory in the second year given the complexity of their calculation.
Navigating Environmental, Social, and Governance (ESG) Compliance
In Australia, navigating the complexities of ESG compliance can be daunting, especially for Group 2 and Group 3 companies who have not previously aligned to TCFD or ISSB, which the AASB disclosures are based upon.
Avetta offers a comprehensive solution and collectively with ReGen Strategic can help your company with:
- Capturing Scope 3 emissions at scale with direct data provided by suppliers, mitigating risks of green washing
- For hiring firms, Scope 3 - meet reporting requirements and avoid external background against spend-based calculations
- For suppliers, Scope 1 and Scope 2 – as more RFPs and business partners require carbon emissions reporting, our free calculator and training tools help suppliers prepare to meet regulatory requirements and stay competitive
- Easing the reporting burden for suppliers with a semi-automated, free carbon calculator attuned to their region and industry
- Supporting supplier compliance and continuous improvement with access to sustainability and decarbonisation playbooks with actionable strategies
- Going beyond calculations with transparency into all material sustainability business risks in the supply chain including environmental, social, and governance with scored assessments and supporting documentation review
- Building assurance with Sustainability and Social auditing by global experts
Actionable Steps to Drive Sustainability Throughout Your Supply Chain
Avetta’s onboarding team ensures suppliers receive an ESG evaluation experience tailored to their size, sustainability maturity, and specific industry.
Our supplier success professionals engage suppliers to help drive program adoption and ensure timely completion.
Avetta also provides access to carbon emissions calculators to guide suppliers through a step-by-step process for entering data. Suppliers can also access continuous improvement plans to reduce their Scope 1 and 2 emissions permanently, supporting Client Scope 3 reductions without carbon offsets.
To help anchor and contextualize data for suppliers, Avetta provides benchmarking comparisons against similar Supplier trade types and geographies to showcase additional performance opportunities.
Creating Business Value and Maximising Positive Social and Environmental Impact
ReGen Strategic is an ESG and impact advisory providing sustainability consulting services, including:
- Stakeholder-driven materiality assessments
- Sustainability and ESG strategy
- Baseline assessments
- Sustainability and ESG reporting, in alignment with national and global standards and frameworks
- Statutory environmental compliance audits
- Social impact assessments / social performance services
- Stakeholder engagement
- Government relations
- Strategic communications
Avetta and ReGen Strategic have partnered together to help firms continuously optimise their supply chain for sustainability and minimise environmental impact. Together we help companies comply with growing sustainability regulations, map and improve supply chain sustainability and ESG performance, and deliver a positive impact for people and the planet.
Taking the Next Steps Toward ESG Compliance
With mandatory requirements finalised in September and the first in-scope entities needing to report in 2026, now is the time for your organisation to act.
Avetta offers a centralised SaaS platform, expert services, and professional support for supply chain management. Our Scope 3 supplier carbon emissions data capture and verification solution simplifies the complexities of compliance, providing the visibility needed to navigate this new era of sustainability reporting.
“One thing I've been impressed with is the level of support from Avetta. Questions are handled quickly. Without this level of support, some of our processes wouldn’t have been handled as quickly or effectively.” - Penny Ovenden, Procurement Governance Specialist, Pacific National
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Article written by:
Katie Martin, Director, Sustainability and Innovation, Avetta
Colin Davies, General Manager, Sustainability and ESG, ReGen Strategic