MEDIA RELEASE (AU)

Australia's largest organisations are shaping good practice in mandatory climate reporting, according to two new research reports from the University of Sydney Business School and Chartered Accountants Australia and New Zealand. 

The reports found large Group 1 entities and their assurance providers have built significant climate reporting capability. More than half of Group 1 entities engaged external expertise to help prepare their climate disclosures. The findings highlight both the complexity of implementation and the significant investment organisations have made to build reporting capability.  

Smaller Group 2 and Group 3 entities continue to build the systems, governance arrangements and processes needed to meet future reporting requirements. Findings also suggest some later reporters may be underestimating the scale of preparation their sustainability reports will demand once their obligations commence. 

Under Australia's phased implementation timetable, Group 2 entities will generally commence reporting for financial years beginning on or after 1 July 2026, followed by Group 3 entities from 1 July 2027. 

Lead researcher Associate Professor Shan Zhou from the University of Sydney Business School said the findings reinforced the value of starting early. 

“Climate reporting and assurance require new systems, governance arrangements, skills and data collection processes,” Associate Professor Zhou said. 

“The entities that appear most prepared are those that began building these capabilities well before their reporting deadlines.” 

The research initiative was led by the University of Sydney, Monash University and the Australian National University in partnership with Chartered Accountants Australia and New Zealand (CA ANZ). The separate assurance report was also developed in partnership with the Auditing and Assurance Standards Board (AUASB). 

CA ANZ Sustainability Leader, Karen McWilliams, said the priority now was ensuring the lessons of the first reporters reached the entities still to report. 

"Early reporters have built real capability and shown what works. The opportunity now is to make sure every entity entering the regime can build on that, instead of starting over." 

"For the entities and assurance practitioners now entering the regime, the task is substantial but manageable if started early, and far easier with the right support. CA ANZ is committed to giving members the tools and training to prepare well ahead of their deadlines." 

Most entities indicated a preference to use the same provider for both financial statement audits and sustainability assurance engagements, highlighting the importance of early engagement between reporting entities and assurance providers. 

The reports identified several technically complex areas that will require ongoing attention, including forward-looking disclosures, scenario analysis and Scope 3 emissions.  

Assurance providers also highlighted challenges associated with assessing climate-related risks – including physical, weather-related risks and transition-related risks – and ensuring consistency between sustainability disclosures and financial statements. 

The University of Sydney Business School’s Sydney Executive Plus launched the Net Zero sprint in April 2024 to train executives in how to account, report and act on business’ carbon emissions and make the transition to net zero.