Quick Guide: Key Sustainability Disclosure Regimes: Australia CRFD regime

Australia's CRFD regime is contained within the Corporations Act 2001 (Cth) (“Corporations Act”), with the regime's prescriptive reporting requirements set out in AASB S2 Climate-related Disclosures (“AASB S2”), issued by the Australian Accounting Standards Board.  

The CRFD regime commenced on 1 January 2025. Reporting obligations under the regime apply in respect of financial years commencing on and from 1 January 2025 for the first tranche of reporting entities (termed “Group 1” entities), with reporting requirements to be phased in over time to capture a broader group of listed and unlisted entities by 2027-28. 

The CRFD regime requires reporting entities to provide climate-related disclosures in a “sustainability report”, which will form part of the entity's annual reporting suite. 

Disclosures are required across four pillars: climate-related governance, strategy, risk management, and metrics and targets (including in respect of Scope 1, Scope 2 and Scope 3 greenhouse gas (“GHG”) emissions). 

Sustainability reports must also be audited, with assurance requirements being phased up over time from limited to reasonable assurance.

The CRFD regime applies to entities that are required to prepare a financial report under Chapter 2M of the Corporations Act and meet the thresholds for coverage (in either Group 1, 2 or 3) at the end of a financial year. The Group that an entity falls into determines when their reporting obligations commence. 

GROUP 1 ENTITIES

Entities other than registered schemes, registrable superannuation entities (“RSEs”) and retail corporate collective investment vehicles (“CCIVs”) that meet the below criteria:

Meet at least two of three size thresholds:

• Consolidated revenue of the entity (and the entities it controls): A$500 million or more
• End of financial year (“EOFY”) consolidated gross assets of the entity (and the entities it controls): A$1 billion or more
• EOFY employees of the entity (and the entities it controls): 500 or more

OR

Certain National Greenhouse and Energy Reporting (“NGER”) reporters

• Corporations that are registered or required to be registered under the National Greenhouse and Energy Reporting Act 2007 (Cth) (“NGER Act”) and that meet the threshold in section 13(1)(a) of that Act (which relates to Scope 1 and Scope 2 GHG emissions).

GROUP 2 ENTITIES

Entities which meet the below criteria:

Meet at least two of three size thresholds:

• Consolidated revenue of the entity (and the entities it controls): A$200 million or more
• EOFY consolidated gross assets of the entity (and the entities it controls): $500 million or more
• EOFY employees of the entity (and the entities it controls): 250 or more

OR 

All other NGER reporters 

• All other registered corporations, or corporations required to be registered, under the NGER Act

OR

Registered schemes, RSEs or retail CCIVs where:

• EOFY value of assets of the entity and entities it controls are $5 billion or more, or the entity otherwise triggers Group 2 NGER or size thresholds

GROUP 3 ENTITIES

Entities that meet at least two of three of the below size thresholds:

• Consolidated revenue of the entity (and the entities it controls): A$50 million or more
• EOFY consolidated gross assets of the entity (and the entities it controls): A$25 million or more
• EOFY employees of the entity (and the entities it controls): 100 or more

Note: Registered schemes, RSEs and retail CCIVs will also be Group 3 entities if they meet at least two of these thresholds (to the extent not already captured under the Group 2 thresholds). 

Reporting entities are required to report for financial years commencing on and from:

• Group 1 entities: 1 January 2025
• Group 2 entities: 1 July 2026
• Group 3 entities: 1 July 2027

Reporting entities are required to prepare a sustainability report and lodge the report with the Australian Securities and Investments Commission (“ASIC”), consistent with the timing of lodgement of their annual financial report. 

The sustainability report consists of the climate statements for the financial year, any notes to the climate statements, any statements or notes which may be prescribed by regulation (none currently) and a directors' declaration. 

The climate statements for a financial year, and notes to the climate statements, must disclose all of the following:

• the entity's material climate-related financial risks and opportunities (if any);
• the entity's climate-related metrics and targets for the financial year, including in relation to Scope 1, Scope 2 and Scope 3 GHG emissions and any associated reduction targets (if any); and
• any information about governance of, strategy of or risk management by the entity in relation to these risks, opportunities, metrics and targets, as required by AASB S2.

Under the regime, entities must also use climate-related scenario analysis to assess their climate resilience (i.e., the capacity to adjust to climate-related changes and uncertainties), as required by AASB S2. The Corporations Act requires that scenario analysis is carried out using at least both of the following temperature scenarios:

• a high global warming scenario (where the global average temperature increase “well exceeds” 2°C above pre-industrial levels (equating to an increase of 2.5°C or higher)); and 
• a low global warming scenario (where the global average temperature increase is limited to 1.5°C above pre-industrial levels).

For financial years commencing on or before 30 June 2030, the sustainability report is required to be reviewed or audited to the extent required by sustainability assurance standards issued by the Australian Auditing and Assurance Standards Board (“AUASB”). 

The AUASB has approved two assurance standards under the Corporations Act 2001 for the CRFD regime:

• Standard on Sustainability Assurance ASSA 5000 General Requirements for Sustainability Assurance Engagements; and 
• Australian Standard on Sustainability Assurance ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports. 

ASSA 5010 phases in assurance as follows:

• 'Year 1': Limited assurance over governance, certain strategy disclosures, and Scope 1 and Scope 2 emissions (and any statements that there are no material climate-related risks and opportunities*) in the first year of reporting.**
• 'Years 2-3': Limited assurance over all disclosures.
• 'Years 4 onwards': Reasonable assurance for all disclosures.

* Only applicable to Group 3 entities which rely on section 296B(1) of the Corporations Act and determine they have no material climate-related risks and opportunities.

** Group 1 entities with financial years commencing between 1 January and 30 June will be subject to the 'Year 1' assurance requirements for their first two reporting years.

AASB S2 is based on, and generally aligns with, the ISSB’s IFRS S2 Climate-related Disclosures, with minor modifications for Australian matters. 

Appendix D of AASB S2 incorporates elements of the ISSB’s IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, as considered necessary to enable AASB S2 to function as a standalone mandatory reporting standard.

Liability under the CRFD regime is similar to liability that applies to an entity's financial and directors' reports, apart from a three year modified liability period applicable to the sustainability reporting regime.

The modified liability regime prevents any person other than ASIC bringing civil claims regarding disclosures made in sustainability reports, and associated auditors' reports, in respect of certain 'protected statements', as follows:

• for reports prepared for financial years commencing between 1 January 2025 and 31 December 2027: statements about Scope 3 GHG emissions (including financed emissions), scenario analysis, and transition plans (each within the meaning given by AASB S2); and
• for reports prepared for financial years commencing between 1 January 2025 and 31 December 2025: there is also immunity for representations as to future matters relating to climate. 

Modified liability also extends to a statement required to be made under a Commonwealth law that is the same as a protected statement or differs from a protected statement only in so far as it contains updates or corrections to the protected statement.

However, the immunity does not extend to action brought by ASIC or any criminal action. 

Ordinary liability settings will apply to disclosures made in sustainability reports for financial years commencing after 31 December 2027.

• Corporations Act 2001 (Cth)  Chapter 2M
• AASB S2
• ASIC’s Regulatory Guide 280 - Sustainability reporting  (issued 31 March 2025) 
• ASIC's regulatory resources page on sustainability reporting 
• AASB S2 Knowledge Hub
• Standard on Sustainability Assurance ASSA 5000 General Requirements for Sustainability Assurance Engagement
• Australian Standard on Sustainability Assurance ASSA 5010
• Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001

• Mandatory climate-related financial reporting is here: guidance for reporting entities
• Unpacking ASIC's sustainability reporting regulatory guide