What year one of climate disclosures revealed – and what comes next

Australia’s first year of mandatory climate-related financial disclosure is underway, marking a significant shift in how businesses are expected to understand and report climate risk and opportunity.

While often framed as a compliance obligation, this change goes far beyond reporting requirements. It is beginning to reshape how organisations think about value, resilience and long-term strategy.

The first reporting cycle is providing early insight into how organisations are responding.

It also signals that climate disclosure is the first step in a broader evolution of sustainability reporting, with transition planning, nature-related disclosure and other emerging requirements set to grow in importance.

Early lessons from year one

One of the clearest signals from the first year of reporting is that readiness across business has been uneven.

Many Group 1 entities – organisations captured by the first phase of Australia’s mandatory climate disclosure regime, and typically the largest and most resourced – have not found reporting straightforward. 

According to reports from the Australian Securities and Investments Commission (ASIC) and Purpose Bureau, the first cycle has highlighted scope to improve disclosure quality, consistency and the use of climate information in decision-making.

ASIC’s observations of initial sustainability reports highlight challenges in how organisations govern climate-related disclosures, articulate risks, and integrate climate information into financial and strategic decision-making. 

Many organisations are building the capability needed to respond to evolving requirements and embed climate considerations into core business decisions.

Implications beyond early reporters

As mandatory reporting expands to Group 2 and Group 3 entities, variation in capability is likely to become more visible.

Smaller organisations often face constraints in internal expertise, systems maturity and access to emissions and climate data. 

Many small and medium enterprises that fall outside Group 2 and Group 3 are already indirectly impacted by climate reporting requirements, as larger customers, financiers and supply chain partners increasingly request climate-related data and information.

In practice, reporting obligations are therefore not confined to large corporations – they cascade through value chains.

From reporting to decision-making

The first year of mandatory reporting provides an important baseline for how organisations are beginning to use climate information in decision-making.

Analysis by Purpose Bureau highlights that many organisations are identifying climate-related risks and engaging with key elements of the new reporting framework.

At the same time, the analysis points to opportunities to strengthen aspects of reporting, including quantitative analysis, transition planning, and demonstrating progress against climate targets. 

Together, these findings suggest that while the foundations are being established, organisations are continuing to strengthen their ability to translate climate reporting into strategic decision-making.

As Prof. Terence Jeyaretnam AM, Professor of Practice at Monash Business School and a contributor to the report, observes:

Disclosure is most valuable when it helps organisations better understand the implications of climate risk and opportunity for their business. The real opportunity lies not just in meeting reporting requirements, but in using the process to strengthen strategy, decision-making and long-term resilience.

This shift from disclosure to decision-making is where climate reporting can deliver its greatest value.

By connecting climate considerations to strategy and capital allocation, organisations can use the reporting process to build capability, strengthen resilience and support better long-term decisions.

What comes next: reporting expectations are expanding

While climate disclosure is the immediate focus, it is clear that this is the start of a broader shift in sustainability reporting expectations.

Nature-related reporting is already following climate-related reporting, including the Taskforce on Nature-related Financial Disclosures (TNFD). 

Alongside this, transition planning is becoming more central to how organisations demonstrate credibility in climate strategy. 

To assist organisations in developing best-practice transition plans, Climateworks Centre has created an Australian-first credibility guide, with input from many of Australia’s leading industry groups and climate transition experts. 

In addition, the Australian Treasury has consulted on, and is expected to soon release, climate-related transition planning guidance to support organisations in the transition planning process. 

While robust transition plans are fast becoming the baseline expectation, data from Purpose Bureau reveals a significant gap: only 44 per cent of Q1 reporters have disclosed a formal transition plan. 

 As Julian Soo from Climateworks’ Sustainable Corporates team notes:

As reporting expectations expand, organisations are increasingly expected to show not just where they are today, but how their business model will evolve over time. Best practice transition planning is also moving from a focus on climate towards an integrated approach that considers climate, nature and social considerations in a single transition plan.

Organisations are moving from reporting emissions and risks in isolation, towards more integrated approaches that connect climate, nature and transition planning into a single framework. 

What businesses can do now

Year one of climate disclosure has made it clear that the focus is now shifting toward how organisations can better use climate information to inform decision-making and strategy. On top of this, reporting requirements will only expand in scope from here.

Organisations that invest early in systems, skills and transition planning are better positioned to engage strategically with a rapidly evolving landscape.

Our Net Zero Academy program supports professionals to navigate this shift – turning reporting from a compliance exercise into a strategic tool for decision-making.