After years of voluntary frameworks and aspirational commitments, mandatory climate-related financial disclosure has arrived in Australia. The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act is now law, and if you’re running a business of any significant size, you need to pay attention.

I’ve been tracking this legislation since the initial consultation paper, and the final version is both more demanding and more practical than many expected. Here’s what you actually need to know.

Who’s affected and when

The reporting requirements roll out in three groups, based on entity size:

Group 1 (reporting from 1 January 2025): Large entities that meet at least two of these thresholds — consolidated revenue of $500 million or more, consolidated gross assets of $1 billion or more, or 500 or more employees. Also includes entities already reporting under the NGER scheme with significant emissions.

Group 2 (reporting from 1 July 2026): Entities meeting at least two of — consolidated revenue of $200 million or more, consolidated gross assets of $500 million or more, or 250 or more employees.

Group 3 (reporting from 1 July 2027): Entities meeting at least two of — consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees.

If you’re in Group 3, you’ve got roughly 18 months to get ready. That sounds like a lot. It isn’t.

What you need to report

The framework is based on the ISSB standards (IFRS S1 and S2), adapted for the Australian context by the AASB. In plain English, you need to disclose information across four pillars:

Governance: How your board and management oversee climate-related risks and opportunities. This means board skills, committee structures, management responsibilities, and escalation processes.

Strategy: The actual and potential impacts of climate-related risks and opportunities on your business, strategy, and financial planning. Including scenario analysis — which is where most companies are going to struggle.

Risk management: How you identify, assess, prioritise, and manage climate-related risks. This needs to be integrated with your broader risk management processes.

Metrics and targets: The metrics you use to measure and manage climate-related risks and opportunities, including greenhouse gas emissions (Scope 1, 2, and eventually 3).

The Scope 3 question

The biggest source of anxiety is Scope 3 emissions — the emissions from your value chain, both upstream and downstream. For Group 1 entities, Scope 3 reporting is required but there’s a transitional relief period. For Groups 2 and 3, the timeline is more generous.

The practical challenge is that most Australian companies don’t have reliable Scope 3 data. Their suppliers don’t track emissions consistently, and the methodologies for estimation are still evolving. The legislation acknowledges this by providing safe harbour provisions for forward-looking statements and Scope 3 disclosures during the transition period.

My advice: don’t wait for perfect data. Start mapping your value chain now, identify your biggest emissions hotspots, and begin the conversations with key suppliers. You’re going to need that data eventually, and the companies that start early will have a significant advantage.

What the safe harbour actually means

There’s been a lot of confusion about the modified liability provisions. Here’s the deal: during the transitional period, there is protection from civil liability for certain forward-looking statements and Scope 3 disclosures, provided they’re made in good faith with a reasonable basis.

This is not a free pass to make things up. You still need to have a reasonable basis for your disclosures, and you still need to act in good faith. But it does mean that companies won’t face legal action simply because their climate projections turn out to be wrong — which is a sensible approach given the inherent uncertainty involved.

What smart companies are doing right now

The organisations that are handling this best aren’t treating mandatory reporting as a compliance exercise. They’re using it as a catalyst to actually understand their climate-related risks and opportunities.

That means investing in data systems, building internal capability, engaging with their boards properly, and — crucially — starting the scenario analysis work now rather than scrambling at the last minute.

The companies that wait until six months before their reporting deadline are going to produce terrible disclosures, and the market will notice.

The practical starting point

If you’re not sure where to begin, start with a gap analysis. Compare what you’re currently disclosing (or collecting internally) against the AASB requirements. Identify your biggest gaps. Prioritise the ones that require the most lead time — typically data systems, Scope 3 mapping, and scenario analysis. Some companies are working with AI consultants in Melbourne to build automated data collection pipelines that can handle the volume and precision mandatory reporting requires.

And get your board engaged early. This isn’t just a sustainability team issue. It’s a board governance issue, and directors need to understand what’s coming.