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From 2025 onwards, entities preparing annual reports under Chapter 2M of the Corporations Act meeting the following criteria will be required to prepare a ‘Sustainability Report’ in accordance with AASB S2 Climate-related Disclosures as part of their annual report.
This shift demands proactive governance, robust data, and strategic integration to meet evolving regulatory and stakeholder expectations.
Mandatory sustainability reporting requirements will roll out in phases, based on entity size and other criteria. The table below outlines where your organisation fits based on size and timing:
| Entities meeting at least 2 of the following 3 criteria: | |||||
|---|---|---|---|---|---|
| Reporting period commencing on or after | Consolidated revenue | Consolidated gross assets | Employees (FTE) |
NGER Registered entities | Registered schemes, registrable superannuation entities & retail CCIVs |
|
Start date: 1 January 2025 |
$500m or more
|
$1b or more
|
500 or more
|
Above NGER
publication threshold |
N/A
|
|
1 July 2026
Group 2 |
$200m or more
|
$500m or more
|
250 or more
|
All other NGER reporters
|
$5b of assets or more
|
|
1 July 2027
Group 3 |
$50m or more
|
$25m or more
|
100 or more
|
N/A
|
N/A
|
ASIC’s Regulatory Guide RG 280, released 31 March 2025, clarifies how sustainability disclosure obligations under the Corporations Act will be enforced. Though industry-agnostic, it’s especially important for the property industry, where climate-related risks and opportunities directly affect asset performance and strategy.
Mandatory sustainability reporting is evolving fast. Under the AUASB’s assurance standards (ASSA 5010 and ASSA 5000), companies must prepare for increasing scrutiny on a phased basis from now through to 2030. This shift goes beyond compliance; it’s about embedding climate resilience into business strategy.
Each industry will respond differently, shaped by its unique value chains, emissions profiles, and stakeholder expectations. The property industry is already taking proactive steps, with many adopting global reporting frameworks, automated emissions tracking, and invested in low-emissions technologies such as on-site renewables. Group 1 companies are also prioritising internal readiness through gap analyses, systems upgrades, and cross-sector collaboration – particularly around Scope 3 emissions and climate risk assessments.
For property leaders, the opportunity lies in leveraging operational data and asset insights to lead Australia’s sustainability disclosure transition and create competitive advantage.
As property firms adapt to mandatory climate disclosures, we’ll be sharing a series of practical insights to help navigate persistent misconceptions and structural challenges. Early understanding of these complexities not only ensures regulatory compliance, but also unlocks long-term value through credible, data-driven sustainability practices.
Below, we unpack the most prevalent misconceptions real estate services firms face under AASB and offer clarity on how to overcome them:
Property firms often operate across jurisdictions and asset classes, managing climate risks at local levels. However, AASB S2 requires consolidated reporting at the Australian financial entity level (including any overseas operations and subsidiaries), which complicates data consolidation, governance, and emissions boundary setting – especially when distinguishing between owned and leased assets. Unclear identification of the reporting entity heightens the risk of non-compliance and inaccurate or incomplete disclosures.
Scope 3 emissions reporting is often misunderstood as optional or too complex. Tenant demands for granular emissions data are rising, but bundled lease agreements and limited access to sub-metered utilities hinder transparency. Downstream emissions like waste, transport, and leased assets are frequently underestimated. Accurately setting organisational and operational emissions boundaries, is imperative to avoid misreporting.
Transition risks – arising from regulatory changes, market shifts, and technological disruption associated with the decarbonisation of the economy – are as critical as physical climate risks but often overlooked. Firms must consider impacts of energy policies, carbon pricing, and tenant expectations on asset value and strategy. Emerging technologies like geospatial analytics and Building Information Modeling (BIM) can help evaluate embodied carbon and risk exposure. Overlooking transition risks can lead to incomplete disclosures and missed strategic opportunities.
While the National Australian Built Environment Rating System (NABERS), Global Real Estate Sustainability Benchmark (GRESB), and Green Star ratings remain valuable for benchmarking and investor communications, they are not formally incorporated into statutory sustainability reporting under the Corporations Act. However, energy efficiency – especially in buildings – is a key focus area in Australia, with international parallels such as the European Union directive mandating retrofits for energy performance. Integrating these ratings into disclosures – especially under strategy, industry-specific metrics and targets pillars of AASB S2 – while avoiding greenwashing per ASIC’s guidance is crucial.
The one-year transition relief for the disclosure of Scope 3 emissions is often mistaken for optional or indefinite deferral. It’s actually a strategic opportunity to build internal capabilities, improve data quality, and prepare for full compliance.
Sustainability reports (particularly climate related disclosures) require external assurance, demanding early preparation to build robust systems, validate data sources, and align governance processes. Fragmented or inconsistent records and data – especially around Scope 3 emissions, tenant energy use, and supply chain impacts – pose risks. Climate disclosures are subject to the existing liability framework in the Corporations Act 2001 and Australian Securities and Investment Commission Act 2001 – meaning any failures to implement the requirements could result in legal penalties, regulatory enforcement and reputational damage.
Successfully meeting evolving climate disclosure requirements means clearly defining your reporting entity, mapping your emissions, identifying gaps, localising scenario analyses, and embedding climate into core business processes.
We help you develop clear reporting frameworks, improve data accuracy, assess risks, and integrate sustainability into your operations. Reach out below for support navigating this complex landscape.
Article contributed to by Sayantika Ray - ESG
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