Source: University of Sydney, Business School and Chartered Accountants Australia and New Zealand
21 August 2026
Two reports highlight growing capability and valuable lessons for entities preparing for future reporting obligations.
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 significant climate reporting capability has been developed among large Group 1 entities¹ and their assurance providers, with more than half engaging external expertise as part of their climate reporting preparations. This finding highlights 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. The report also suggests some later reporters may be underestimating the scale of preparation required to produce the sustainability report soon to be required by law.
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 research highlights the importance of maintaining momentum as more entities enter the reporting regime.
“As the next wave of Group 1 reporters lodge their climate-related disclosures, the experience of early reporters is providing valuable insights into what effective climate reporting looks like in practice,” Ms McWilliams said.
“The opportunity now is to build on those lessons and ensure the whole market is ready for what’s next.”
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.
CA ANZ continues to support its members and reporting entities through climate reporting and assurance resources, professional development opportunities and broader capacity-building initiatives to help the profession prepare for the expanding reporting regime.
¹Organisations are classified as Group 1, 2 or 3 entities based on legislative thresholds such as revenue, assets and employee numbers. Group 1 entities entered the regime first, followed by Group 2 entities and then Group 3 entities.
Research
Preparedness of Australian Entities for AASB S2 Climate-related Reporting: https://doi.org/10.25910/j95n-g420
Preparedness of Australian Auditors for Assuring Climate-related Disclosures: https://doi.org/10.25910/fyqe-cn26
Declaration
This research was supported by the Auditing and Assurance Standards Board and Chartered Accountants Australia and New Zealand. AUASB and CA ANZ respect the independence of the researchers and have not attempted to influence the research or findings in any way.