Many entities across Australia and New Zealand are navigating a new world of mandatory climate-related disclosure (CRD) reporting and assurance. Further developments are in the pipeline; here are five you need to know about.

1. Mandatory climate reporting kicks off in Australia

Following the legislative amendments to the Corporations Act 2001, the Australian Accounting Standards Board (AASB) published a mandatory standard AASB S2 Climate-related Disclosures and a voluntary standard AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information.

Group 1 entities must report for financial years beginning on or after 1 January 2025. Group 2 and Group 3 entities are required to report for financial years starting on or after 1 July 2026 and 1 July 2027, respectively.

Emma Herd, co-leader, EY Net Zero Centre, and partner, climate change and sustainability services, EY Australia, says two decades of experimentation with voluntary sustainability reporting puts companies in a solid position for mandatory reporting requirements.

“We’ve learned what’s valuable, we’ve learned what the right measures and metrics are, and we understand many of those relationships between financial impact, value and sustainability issues,” she says.

“We’re now entering a new cycle, which is about embedding sustainability at the heart of financial accounting and reporting in a mandatory compliance environment,” adds Herd. “I think we’re moving away from this idea that there are two types of company reporting – financial and non-financial – and we may end up with one type of company reporting, which includes the financially material parts of climate and other sustainability issues and more focus on the impact side of the reporting.”

2. All eyes on ISSA 5000

ISSA 5000 General Requirements for Sustainability Assurance Engagements was formally launched by the International Auditing and Assurance Standards Board (IAASB) on 12 November 2024. Designed for use by both professional accountants and non-accountant assurance practitioners, it provides a principles-based framework for conducting assurance engagements on sustainability disclosures.

The International Ethics Standards Board for Accountants (IESBA) also issued International Ethics Standards for Sustainability Assurance (including International Independence Standards) in January this year. The standard is designed to work with ISSA 5000 to support high-quality assurance engagements over sustainability reports. New ISO standards are also under development.

The Australian Auditing and Assurance Standards Board (AUASB) approved the adoption of ISSA 5000 in Australia in January. Known as ASSA 5000 General Requirements for Sustainability Assurance Engagements, the new standard will apply to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025.

Doug Niven FCA, chair and CEO, AUASB, says adoption of the international standard was important for several reasons.

“Firstly, we have mandatory assurance of reporting for the Group 1 entities, which commenced 1 January 2025,” he says. “We also needed a standard for voluntary assurance. Furthermore, adopting ISSA 5000 promotes international consistency, which supports a lower cost of capital for Australian companies.”

In New Zealand, the External Reporting Board (XRB) is monitoring the uptake and implementation of these international standards as it considers whether the standards should be adopted for use in New Zealand.

“We will explore the implications of the requirements in these new international standards for our temporary standard, NZ SAE 1 Assurance Engagements over Greenhouse Gas Emissions Disclosures,” says Wendy Venter FCA, XRB CEO, adding that the XRB intends to engage with stakeholders in the coming months to seek their views on the standards before making any decisions.

3. Phasing of assurance for Australia’s mandatory climate reporting

For climate reporting entities, ASSA 5000 will be subject to the phasing in of limited and reasonable assurance under AUASB standard ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001.

“Phasing was developed after extensive consultation and the model that we have developed is firstly responsive to demands from investors and others about the credibility and reliability of information,” says Niven. “We’ve balanced that with the need for assurance practitioners and companies to upskill in this area and to have the appropriate resources to be ready for assurance.”

4. Consultation to explore differential climate reporting in New Zealand

The XRB will be consulting soon on the Aotearoa New Zealand Climate Standards to seek feedback on differential climate reporting for different sizes and classes of entities. This consultation is an element of the XRB’s planned post-implementation review of its climate standards, which commenced January 2023, to understand the extent to which the standards are meeting the needs of preparers and users.

Through the consultation, and based on the implementation experience to date, the XRB is seeking to learn whether any of the existing disclosure requirements have a lower cost-benefit outcome for preparers and users. For example, smaller entities may obtain less internal decision-making value from certain disclosures and find them costly to undertake compared to the value they provide to primary users.

“Internationally, we are seeing work being done on developing reduced disclosure requirements for small- and medium-sized enterprises, such as by the OECD and in Europe,” says Venter. “We are engaging closely with this work to ensure New Zealand’s standards are internationally aligned and locally relevant.”

5. Climate first, not climate last

Climate standards are evolving beyond the private sector with the International Public Sector Accounting Standards Board consulting on climate-related disclosures for the public sector.

The development of climate-related financial disclosures is also widely viewed as a first step on a path to broader sustainability reporting.

“ISSB [International Sustainability Standards Board] has signalled that the next two standards that it will develop will be focused on nature and biodiversity, and the human capital and the social elements of sustainability,” says Herd.

She adds that this potential development will influence how companies lay the groundwork for sustainability performance.

“Companies are expecting to expand beyond climate reporting and the regulators have clearly signalled that it’s climate first, not climate last.”

Phasing of assurance for mandatory climate reporting

Helpful resources

Want to find out more about climate-related disclosure reporting and assurance? Check out these CA ANZ tools and resources.

Australia and New Zealand

• CA ANZ Sustainability Community 2025
• CA ANZ carbon accounting FAQs
• CA ANZ sustainability tools and resources
• CA ANZ climate resources

Australia only

• Practical roadmap to prepare for climate-related disclosures
• Scenario analysis information guide
• Transition plans information guide