How to prepare for mandatory climate reporting 

Mandatory climate reporting is no longer approaching – it’s here

When we first covered Australia’s mandatory climate-related financial disclosure regime, it was framed as a coming change. That’s no longer the case. Group 1 entities, including large listed companies, financial institutions and major superannuation funds, have completed or are midway through their first AASB S2 reporting cycle. As of 1 July 2026, Group 2 entities are now in their first mandatory reporting period.

Talent Nation’s FY26 sector survey shows how far this has moved up the agenda. Climate change and net zero strategy, together with reporting and disclosures, now rank among the top priorities for ESG and sustainability professionals heading into the next 12 months. Yet only 59% of respondents feel their organisation is ready for mandatory reporting, and 46% are still capturing the underlying data in spreadsheets.

For Group 2 organisations, the runway has run out. For Group 3 entities (from 1 July 2027), there’s still time to prepare properly – but the Group 1 and Group 2 experience shows that “still time” shrinks fast once data collection and hiring lead times are factored in.

The reporting standards, summarised

AASB S2, issued by the Australian Accounting Standards Board, is Australia’s mandatory climate-related financial disclosure standard. It aligns with IFRS S2 and builds on the TCFD framework. Reporting entities must disclose:

• Governance, strategy, risk management, metrics and targets related to climate.
• The financial impacts of climate-related risks and opportunities, including anticipated impact over time.
• Climate resilience analysis under at least two scenarios – a 1.5°C increase above pre-industrial levels and a scenario where warming “well exceeds” 2°C.

This is a simplified summary. For the full detail, see ASIC’s guidance on mandatory climate reporting.

Who it will impact, and when

Group 1’s first reports have started landing with regulators, giving the market its first real look at how disclosure quality and assurance readiness are shaping up in practice. Group 2 entities now face the same requirements, with less lead time to build capability than Group 1 had.

What Group 1’s first reporting cycle has shown

Talent Nation’s FY26 survey of the ESG, environment and sustainability sector points to a market still catching up with the scale of the task. Team growth has lagged expectations, with only 34% of organisations expanding their sustainability teams over the past 12 months against the 66% who expected growth this time last year, leaving many teams absorbing new reporting obligations without matching headcount. Competing business priorities, reduced budgets and limited headcount are the most commonly cited barriers, and 54% of professionals report they are stretched to the point of impact or burnout.

• Talent shortages persisted through Group 1’s first cycle and, if anything, intensified as Group 2 organisations began competing for the same specialist talent pool.
• Consultancies that were booked out during Group 1 preparation remain constrained, pushing more organisations toward building in-house or fractional capability.
• Manual data collation remains common – 46% of organisations are still using spreadsheets for ESG data capture, and only 25% have implemented a dedicated ESG data platform.

How to prepare – whichever group you’re in

If you’re a Group 2 entity (reporting now)

Your first reporting period is already under way. Priorities shift from planning to closing gaps fast:

• Confirm exactly what your first disclosure needs to cover and who signs off internally – board and management may be asked to comment on material they have not previously owned.
• Identify capability gaps now rather than at lodgement time. Even temporary or fractional support (a fractional CSO, interim reporting analyst, or contract carbon accountant) can bridge the gap while you build a permanent team.
• Do not wait on consultancies – most remain booked out well in advance. Specialist recruitment is often the faster path to capability.

If you’re a Group 3 entity (reporting from 1 July 2027)

You have roughly a year of genuine runway. Use it deliberately rather than passively:

• Audit current climate literacy across finance, legal and risk teams to understand where the real gaps sit.
• Start building relationships with specialist recruiters and candidates before the deadline pressure hits, since Group 1 and Group 2 have already absorbed much of the available talent pool.
• Watch for any regulatory relief or transitional provisions that may apply to your organisation, and apply early if you intend to seek it.

For every group: focus on the benefits, not just the obligation

Climate reporting is easier to resource internally when it is framed as more than a compliance cost. Comparable regimes overseas (e.g. the EU’s CSRD) have shown organisations reporting benefits including improved environmental and social performance, stronger stakeholder engagement, better risk mitigation, and more effective governance. Investor appetite for this information continues to grow, reinforcing the business case for getting ahead of it rather than treating it as a last-minute compliance exercise.

Competing for ESG and climate talent as a smaller organisation

Group 2 and Group 3 entities are often competing for the same limited talent pool as Group 1’s largest organisations. A few things help:

• Act early – smaller organisations can typically move faster than large enterprises once a hiring decision is made.
• Sharpen your employee value proposition. You may not outbid a bank or a super fund on salary, but culture, scope of impact and flexibility can compete.
• Bring in specialist recruitment support rather than relying solely on internal HR or generalist agencies – climate and ESG hiring requires sector-specific screening that general recruiters often cannot provide.

Ready to build your AASB S2 reporting team?

At Talent Nation, we’ve spent years building a reputation for quality and efficiency, building one of the most sophisticated networks of ESG professionals in the ANZ region. We know how to access the best talent from within the region and beyond, and can guide you on structuring your team, establishing competitive pay rates and setting a candidate up for long-term success.

No matter the size of your organisation, now is the perfect time to prepare for mandatory climate reporting. Learn more about how the Talent Nation team can assist you by clicking here, or reach out to us today to discuss how the new requirements may impact your business.