Mandatory Sustainability Reporting in Practice is our in‑depth analysis into the first wave of Australia’s mandatory sustainability reports, with practical learnings and key takeaways for directors and management.[1]
Insights for directors
Even with temporary liability protections in place, directors are still required to exercise due care and diligence in approving sustainability reports and take all reasonable steps to secure compliance with mandatory reporting requirements.
Practically, this means that for directors, the priority is climate literacy, clear information flows and confidence in the systems, controls and assurance supporting approval of the report and the directors’ declaration.
Amongst other things, we found that:
- 83% of companies now include a dedicated climate, ESG or sustainability metric in their board skills matrices.
- 52% of boards or board committees receive ESG-related updates on a quarterly basis (most commonly through board committee reporting), with a further 17% receiving updates biannually.
- 61% of companies have established a dedicated sustainability or environment committee at board level.
Insights for sustainability, finance and risk teams
Early market practice in how to draft mandatory sustainability reports has been broadly aligned, especially on governance and risk identification, but diverged where companies need to exercise judgment. The challenge now is moving from first-year compliance to clear, documented and repeatable reporting processes as requirements mature beyond year one.
Our key takeaways included that:
- Companies disclosed on average:
- 3 material climate‑related risks, and
- 1 material climate‑related opportunity.
- Most companies (83%) provided a mixture of qualitative and quantitative disclosures about the current and anticipated financial effects of material climate-related risks and opportunities on their financial position, financial performance and cash flows.
- 87% disclosed financial effects of identified material risks and opportunities on an individual basis (i.e. risk-by-risk and opportunity-by-opportunity), with the remaining 13% disclosing a cumulative quantum across the risks and opportunities they identified as material.
Insights for legal teams
The central issue for legal teams is not only what is disclosed, but how key judgments are framed, supported and located within the reporting suite.
Findings included:
- 87% of companies included climate reporting within their annual report, while the remaining 13% prepared a standalone sustainability report that was lodged alongside their annual report.
- While 78% of companies included their basis of preparation and methodology within the mandatory sustainability report, others relied on cross‑referencing to external documents.
- 26% of companies included their climate transition plan in their mandatory sustainability report, while 35% of companies published climate transition plans separately. 39% of companies had no climate transition plans.
Our analysis draws on a review of publicly available mandatory sustainability reports published on the ASX on or before 3 March 2026 by 23 Group 1 reporting entities with a 31 December 2025 year end. The insights in this publication represent a point-in-time analysis of market practice which is continuing to evolve. We refer to ‘companies’, ‘reporting entities’ and ‘entities’ interchangeably throughout this publication and references to ‘sustainability reports’ are to mandatory reports under the new regime unless otherwise stated. All quantitative insights provided have been rounded to the nearest whole number and are based on the data set outlined above.
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