What should your sustainability report contain?
Under s296A(1) of the Corporations Act 2001 (Corporations Act), the sustainability report for a financial year consists of:
- the climate statements for the year;
- any notes to the climate statements; and
- the directors’ declaration about the statements and notes.
Climate statements
Climate statements must comply with the relevant sustainability standards made by the Australian Accounting Standards Board (AASB) under s 336A of the Corporations Act. The AASB is expected to make these mandatory sustainability standards imminently.
Section 296D of the Corporations Act requires that the climate statements and notes for a financial year must together disclose:
- the entity’s material climate-related financial risks and opportunities;
- the entity’s metrics and targets for the financial year relating to climate that are required to be disclosed by the sustainability standards, including in relation to scope 1, 2 and 3 emissions of greenhouse gas; and
- any information about the entity’s governance, strategy, or risk management in relation to these risks, opportunities, metrics and targets.
The specific disclosures required in climate statements are to be determined by the sustainability standards once made.
An entity must disclose information about its climate resilience, as assessed under at least two possible future states (called ‘scenario analysis’). The Corporations Act requires scenario analysis to be carried out using at least two scenarios referable to temperature increases set out in subparagraphs 3(a)(i) and 3(a)(ii) of the Climate Change Act 2022. The two mandated scenarios are currently:
- increase in global average temperature of 1.5°C above pre-industrial levels; and
- increase in global average temperature well exceeding 2°C above pre-industrial levels (meaning an increase of 2.5°C or higher).
Consolidated reporting
If the accounting standards require the parent of a consolidated entity to prepare consolidated financial statements for a financial year, the parent may elect to prepare a consolidated sustainability report for the year.
Notes to the climate statements
The legislation also provides that the sustainability report must include notes to the climate statements containing:
- any disclosures required by the Minister in relation to the preparation of, or anything included in, the climate statements;
- anything required by the sustainability standards; and
- any other information necessary to ensure that climate statements and notes together meet the content requirements set out in section 296D of the Corporations Act.
No notes to the climate statements are currently required by the Minister or proposed by the AASB under its sustainability standards.
Directors’ declaration
A sustainability report must include a directors’ declaration which is a declaration by the directors of their opinion on whether the contents of the sustainability report are in accordance with the Corporations Act, including that the sustainability report complies with the sustainability standards (once made).
However, for the first three years of the sustainability reporting regime (i.e. from 1 January 2025 to 1 January 2028), this obligation is modified such that directors must provide an opinion only as to whether the entity has taken reasonable steps to ensure the contents of the sustainability report are in accordance with the Corporations Act.
Climate statements for entities with no material climate risks or opportunities
For smaller entities, if there are no material climate-related financial risks or opportunities, the climate statements included in the sustainability report may comprise:
- a statement that there are no material financial risks or opportunities relating to climate for the entity; and
- a statement explaining why this is the case.
This type of climate statement may only be made by entities that:
- are not NGER reporters; and
- fall below the thresholds set out in the table below.
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Entity type |
Thresholds below which entities (including controlled entities) that have no material climate risks or opportunities may include the climate statements described above |
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Entities that are not asset owners (i.e. entities that are not a registered scheme, RSE or retail CCIV) |
Entities that meet two of the following three criteria:
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Asset owners (i.e. registered schemes, RSEs or retail CCIVs) |
Entities where the value of their EOFY assets is $5 billion or less |
For further information, see Who must prepare a sustainability report?