Key points:
- Early ASRS reporters are finding that preparation takes longer than expected and the process is improved when started well ahead of the first reporting year.
- Clear Board and executive ownership is critical; ASRS outcomes suffer when treated as a pure compliance and finance-led exercise.
- Starting early allows organisations to move beyond compliance and use the process to improve insight into climate risk, resilience and strategic decision‑making.
Australia’s sustainability reporting framework
The Australian Sustainability Reporting Standards (ASRS) now form part of the annual reporting requirements for many Australian businesses. In particular, AASB S2 – Climate‑related Disclosures requires entities to explain how material climate‑related risks and opportunities are identified, governed and managed, and how they affect the business throughout the financial year.
Importantly, ASRS disclosures are intended to reflect what actually happened during the year. They are not designed to be assembled retrospectively at year‑end, which has practical implications for systems, processes and governance.
Who is reporting and what comes next
The first to report under ASRS were Australia’s largest entities. This included Group 1 organisations with revenue above $500 million, gross assets exceeding $1 billion or workforces of 500 or more employees, along with major emitters captured under the National Greenhouse and Energy Reporting (NGER) regime, and certain other entities.
Many of these Group 1 entities with December 2025 year ends have now completed their first reporting cycle, and their experience is starting to provide useful insights for Group 2 and Group 3 entities.
Group 2 entities, those with revenue of $200 million or more, gross assets of $500 million or more, or at least 250 employees, will be required to report for financial years commencing on or after 1 July 2026.
Group 3 brings a broader range of mid‑market organisations into scope, generally entities with revenue of $50 million or more, gross assets of $25 million or more, or 100 or more employees. Group 3 entities will commence reporting for financial years commencing on or after 1 July 2027.
For Group 2 and Group 3 entities, the reporting dates are fast approaching. Although, the lead‑in period may feel comfortable on paper, experience suggests time passes quickly.
Lessons from the first wave of ASRS reporting
While the regime is being phased in over time, the reporting requirements themselves are consistent. As a result, the experience of the early reporters provides practical lessons for Group 2 and Group 3 entities now preparing for their first reporting years.
Start earlier than you think you need to.
Even organisations that believed they had strong existing frameworks found that aligning governance, embedding processes and sourcing reliable data took longer than anticipated.
Executive and Board ownership matters.
Where Boards and CEOs were visibly engaged, reporting progressed more smoothly. Where ASRS was treated as a compliance or finance‑led exercise, progress was often slower and less effective.
This is a business‑wide task.
Climate reporting draws on inputs from across the organisation including finance, operations, procurement, HR and risk. Those that involved these teams early found it easier to build consistent and reliable data and processes.
Good analysis takes time to develop.
Developing a robust understanding of material climate risks and opportunities takes time. Initial climate risk and opportunity assessments were often high‑level. As organisations refined their understanding across different geographies, assets and markets, the quality of analysis improved. Boards also benefited from having time for multiple discussions to test assumptions and challenge conclusions.
For organisations yet to commence reporting, the main challenge is preparation rather than compliance.
Having systems, data collection and governance operating in place from the start of the reporting period enables disclosures to be based on contemporaneous activity rather than retrospective reconstruction or estimation. This also provides boards with sufficient time to meaningfully engage with the underlying analysis and supporting documentation. It also creates space for Board engagement without time pressure.
More than a compliance exercise
While compliance is required, the real value from ASRS comes from the insights it generates into climate risk, resilience and strategy. The process brings issues such as supply chain vulnerability, energy dependence, transition exposure and opportunity identification into a structured and visible discussion, rather than leaving them fragmented across the organisation and overlooked in strategic decision‑making.
Recent disruption in global energy markets, for example, has highlighted the risks associated with over-reliance on fossil fuels and imported energy. For Australian organisations, this raises questions around energy security, cost volatility and resilience.
These are climate‑related transition risks, and ASRS preparation provides a framework for understanding exposure, dependency and potential responses, helping organisations make more informed strategic decisions.
How Pitcher Partners can help
We work with middle market entities, especially Group 2 and Group 3 entities on ASRS readiness, including early assessments, board education, implementation support and assurance preparation. Our approach focuses on practical preparation, clear governance and proportionate processes aligned to organisational scale.
