What the first year of mandatory climate reporting tells us: insights from the ASX-listed cohort 

The first year of mandatory climate reporting is providing a valuable picture of how ASX-listed businesses in the first reporting cohort are responding to the new requirements – and, importantly, how climate-related information is beginning to connect with governance, strategy and financial decision-making.

The State of the Market: The ASX-listed cohort report, prepared by Purpose Bureau in partnership with Chartered Accountants Australia and New Zealand (CA ANZ) and Monash Business School, analyses the disclosures of 154 ASX-listed Group 1 entities reporting under the Australian Sustainability Reporting Standards (ASRS). It provides one of the first data-led views of this cohort as companies navigate the inaugural reporting cycle. 

Climate reporting is part of mainstream corporate reporting

For most companies, climate reporting is not sitting separately from their broader corporate reporting. 84% of the companies analysed embedded their climate disclosures within their annual financial report, with a median report length of 24 pages. Strategy accounts for the largest share of that content, reflecting the more substantive requirements around understanding how climate-related risks and opportunities could affect an entity’s business model and prospects. 

The report also shows that governance arrangements are well established. All 154 entities disclosed board-level oversight of climate-related matters, while 94% identified their audit and risk committee as having a role. Boards engaged with climate reporting an average of four times during the reporting process, and 86% of reporters disclosed climate-related skills training for their board or members. 

The disclosures  connect climate and business strategy

The disclosures also provide insight into how companies are thinking about the risks and opportunities associated with climate change. Across the cohort, 1,386 climate-related risks and opportunities were identified, with physical risks accounting for around two-thirds. Flooding, storms and wildfires were among the most commonly identified acute physical risks, highlighting the very tangible operational and financial implications climate change can have for Australian businesses. 

At the same time, opportunities are emerging alongside risks. Products and services and new markets were the two most frequently identified opportunity categories, illustrating that climate change is being considered not only in terms of potential disruption, but also in terms of changing markets and business models. 

There are also early signs of companies translating this thinking into action. More than half of the cohort disclosed a transition plan, with quantitative Scope 1 and Scope 2 reduction pathways common among those with plans. While Scope 3 pathways in transition plans were less prevalent, the report notes that many companies have continued to disclose some Scope 3 information despite taking the year-one exemption. 

A reporting journey that will continue to evolve

The first year was always going to be a period of learning and development. The data shows both the breadth of activity already underway and areas where disclosures are likely to develop as reporting matures.

For example, while financial effects are widely discussed, relatively few climate-related risks and opportunities have been quantified in dollar terms. Similarly, scenario analysis is widespread, but fewer than half of reporters quantified the outcomes of their scenarios or demonstrated how those scenarios informed capital allocation. 

Taken together, the findings provide an encouraging early snapshot of Australia’s transition to mandatory climate reporting. They show climate information moving into mainstream corporate reporting and governance, while also highlighting the opportunity for companies to deepen the connection between disclosure, strategy and financial decision-making in the years ahead.