Group 2 Climate Reporting Is Coming: What Companies Should Prepare Before July 2026

Australia’s mandatory climate reporting regime is not a distant obligation. For Group 2 entities, the first reporting period starts with financial years beginning on or after 1 July 2026 — meaning companies that meet the threshold will be preparing and lodging their first sustainability report in the second half of 2027.

If your organisation is close to the Group 2 threshold, the time to assess your readiness is now, not when the first reporting date appears on the calendar.

Who is a Group 2 entity?

Under the Australian Sustainability Reporting Standards (ASRS) framework, Group 2 entities satisfy at least two of the following three criteria at the end of a financial year:

• Consolidated revenue of $200 million or more
• Consolidated gross assets of $500 million or more
• 250 or more employees

This covers a significant number of mid-to-large Australian companies — construction, infrastructure, manufacturing, retail, and services businesses that may not have engaged seriously with sustainability reporting to date.

Group 1 entities (the largest reporters) began their mandatory reporting with FY2025. Group 2 is next. Group 3 follows from FY2027.

What does a Group 2 report actually require?

AASB S2 (Climate-related Disclosures) is the operative standard. It requires disclosure across four areas:

Governance — How your board and management oversee and manage climate-related risks and opportunities. This means documented governance processes, not just a paragraph about who sits on which committee.

Strategy — The climate-related risks and opportunities you’ve identified, how they affect your business model and financial position, and your resilience across different climate scenarios.

Risk Management — How climate-related risks are identified, assessed, and managed as part of your overall risk management framework.

Metrics and Targets — Quantitative data. At minimum, this means Scope 1 and Scope 2 greenhouse gas emissions in CO₂-equivalent. Scope 3 will follow once the phased transition period for that category ends.

The data problem most businesses underestimate

The disclosure framework looks structured on paper. The hard part is having the underlying data to populate it.

Most Group 2 companies entering this regime for the first time will discover that their emissions data is scattered: electricity invoices in accounts payable, fuel records in a fleet system, gas invoices attached to emails, meter readings in spreadsheets that nobody maintains consistently.

Pulling that data together for a single reporting period is a significant project. Doing it under assurance — where an external auditor will verify your figures against source documents — is a different category of work entirely.

Assurance: understand what’s coming

Group 2 entities will be subject to limited assurance in their first years of reporting. That sounds less demanding than “reasonable assurance,” but it still means an external assurance provider will review your emissions figures and their basis.

Limited assurance requires:

• A clear methodology for how you calculated your figures
• Source documents that substantiate the inputs (invoices, meter readings, factor references)
• Evidence that the data was reviewed before being included in the report

If your current process is “someone compiled a spreadsheet and a consultant reviewed it,” that is unlikely to hold up.

Four things to do before July 2026

1. Confirm your Group 2 status. Review your consolidated financials and employee count against the threshold. If you’re borderline, understand what happens in transition years.

2. Map your emissions data sources. Identify every source that will contribute to your Scope 1 and Scope 2 figures — by site, by business unit. Find out where each data point currently lives and who is responsible for it.

3. Identify your data gaps. Common gaps: utility invoices that go to accounts payable and never reach the sustainability team; fuel records by cost centre that can’t be attributed to a site; leased premises where the landlord controls the meter.

4. Build a collection process, not just a spreadsheet. A one-off spreadsheet might get you through year one, but assurance requirements will tighten. Build a process with source document storage, site-level attribution, and a clear calculation methodology from the start.

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The Ayika platform is built for exactly this transition — helping organisations structure their emissions data collection before the first reporting period arrives. Book a walkthrough to see how it works.