US Companies Doing Business in Australia: Understanding Australia’s Climate Disclosure Laws

A regulatory change in Australia aimed at addressing climate change has implications far beyond Australia’s borders. For U.S. companies with Australian subsidiaries, early preparation can reduce downstream reporting burden and improve the quality, consistency and reliability of climate-related data across the broader organization.

In March 2025, the Australian Securities and Investments Commission (ASIC) published Regulatory Guide 280, which sets out how Australia’s mandatory climate reporting regime is administered and enforced under the Corporations Act. Climate reporting obligations commenced for the first reporting group of entities for financial years that began in January 2025, with required disclosures prescribed under Australian Sustainability Reporting Standards (AASB) S2, Australia’s ISSB-aligned climate reporting standard.

An Overview of Australia’s Climate Reporting Requirements

Under Australia’s current regime, mandatory reporting applies to climate-related disclosures only, through AASB S2.

AASB S1, which addresses broader sustainability-related financial information, is not required under Australian law. Entities may elect to apply AASB S1 voluntarily to align with International Financial Reporting Standards (IFRS) S1 and expand the scope of their sustainability disclosures.

While AASB S2 is the only mandatory standard, it is designed to be applied using foundational concepts drawn from AASB S1. These include materiality, fair presentation, connected information and the use of reasonable and supportable data. Importantly, this does not extend mandatory reporting beyond climate-related matters, but it does inform how climate disclosures are prepared, governed and assessed.

For U.S. multinationals, these requirements affect any Australian subsidiary that meets applicable financial, staffing or emissions thresholds. Many companies are grappling with how to integrate these requirements across governance structures, data systems and assurance readiness. U.S. multinationals with Australian subsidiaries must prepare for entity-level climate disclosures that meet Australian legal and assurance expectations.

This is not simply a new reporting requirement. It reflects a broader shift in how investors, regulators and capital providers expect climate-related financial information to be governed, measured and assured. Australia’s adoption of AASB S2 signals that multinational groups will need a coordinated, cross-border approach to data governance, emissions measurement, scenario analysis and board oversight.

Climate Disclosure Rollout Details and Timeline

Australia’s climate disclosure laws represent one of the most comprehensive moves toward mandatory, ISSB-aligned climate reporting. These requirements apply at the Australian entity level, meaning U.S. companies with Australian subsidiaries may be subject to new reporting, assurance and governance obligations depending on entity classification.

Any Australian subsidiary that prepares financial statements under Chapter 2M of the Corporations Act and meets size or emissions thresholds is subject to mandatory climate reporting, with the first reporting obligations having commenced in January 2025 and additional reporting groups coming into scope through July 2027.

This includes entities with revenue of at least AUD 50 million, assets of at least AUD 25 million, more than 100 employees (as of July 2027) or entities captured under Australia’s National Greenhouse and Energy Reporting (NGER) Act.

Australia Climate Disclosure Rollout by Reporting Group

Foreign parent companies cannot rely on U.S. or global group-level ESG disclosures to satisfy Australian requirements. Each Australian entity must prepare its own climate report that meets both the technical content of AASB S2 and the legal expectations of the Corporations Act. Even a single Australian subsidiary may require coordinated governance, emissions data and scenario analysis to support compliance.

Reporting Requirements

Australia’s sustainability reporting framework closely mirrors IFRS S2, with a clear distinction between mandatory and voluntary disclosures. Under the mandatory regime, entities must disclose climate-related information in accordance with AASB S2, organized around four core areas: governance, strategy, risk management, and metrics and targets.

Companies must describe:

• How boards and management oversee climate-related risks and opportunities
• How those risks and opportunities affect strategy, business model and financial planning
• How climate risks are identified and managed within existing risk processes

Quantitative disclosures include Scope 1 emissions, location-based Scope 2 emissions, material Scope 3 categories, climate-related targets and associated financial effects. Boards must provide a directors’ declaration confirming compliance with the climate reporting requirements, supported by robust recordkeeping.

Broader sustainability-related financial disclosures under AASB S1 remain voluntary. Companies may choose to apply AASB S1 to expand disclosures beyond climate and align with IFRS S1, but those disclosures fall outside Australia’s mandatory climate reporting regime.

Assurance expectations add another layer of complexity. Assurance applies only to mandatory climate disclosures prepared under AASB S2, with limited assurance in the early years and a transition to reasonable assurance by no later than 2030. This timeline accelerates the need for documented controls, clear methodologies and audit-ready processes.

Why Compliance Will Be Challenging

Many U.S. companies already produce sustainability reports, but often not with the level of precision, auditability, and entity-specific rigor required under AASB S2. Common challenges include defining material Scope 3 categories, collecting consistent energy and emissions data across operations and conducting defensible scenario analysis. Governance and oversight expectations also exceed those found in most voluntary ESG frameworks.

For U.S. multinationals, coordination between parent and subsidiary is often the most significant challenge. Australian entities require localized systems and controls, while maintaining consistency with group-level methodologies. Without deliberate coordination, the risk of misalignment, duplication or audit findings increases.

What Companies Should Do Now

Early action is essential. Companies should begin by assessing whether their Australian subsidiaries meet thresholds and evaluating data availability for emissions, energy use and climate risk analysis. Establishing governance structures, controls and documentation is critical, alongside identifying gaps in current methodologies. Addressing these challenges in advance will help companies meet Australia’s staggered implementation timelines and prepare for assurance requirements.

Weaver supports U.S. multinationals in navigating the intersection of global sustainability standards and local regulatory obligations. Our team assists with emissions quantification, readiness assessments, governance and controls design, climate risk analysis, scenario modeling and drafting of ISSB-aligned disclosures. We help companies harmonize global reporting practices with local compliance expectations, reducing risk and simplifying cross-border coordination. Contact us for more information and assistance.

Authored by Alyssa Martin, Ashly Pleasant and Holly Roozrokh

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