Effective January 1, 2026, Australia significantly expanded its mandatory climate reporting regime, bringing a new tier of medium-to-large businesses under the purview of the Corporations Act. This expansion, often referred to as the inclusion of "Group 2" entities, lowers the compliance thresholds, now capturing companies with $200 million in revenue, $500 million in assets, or 250 employees.
Affected companies are now legally required to submit an annual Sustainability Report aligned with the rigorous standards of the Australian Accounting Standards Board (AASB). These reports must disclose material climate risks and, crucially, Scope 1, 2, and 3 greenhouse gas emissions. The inclusion of Scope 3 (value chain emissions) forces companies to audit their suppliers and customers, creating a ripple effect of compliance throughout the Australian economy.
The January 2026 expansion also marks a shift in director liability. While a temporary "safe harbor" exists for certain forward-looking statements, the core obligation to disclose is strict. ASIC has signaled that it will enforce these rules to stamp out "greenwashing," making climate diligence a non-negotiable aspect of corporate governance. This moves Australian corporate law from a voluntary ESG model to a hard-law compliance regime.
Source: Landers & Rogers