2025: The year of mandatory sustainability reporting - get ready

Our sustainability webinar series breaks down the complex world of sustainability into digestible pieces, helping you grasp the fundamentals and begin driving change within your organisation.  

In our first webinar of 2025, Aletta Boshoff sets the scene for Australia’s first-ever sustainability reporting standards, equipping you with the knowledge you need to make mandatory climate disclosures.   

Throughout 2025, our webinars will guide you step-by-step through the new standards, AASB S1 (voluntary) and AASB S2 (mandatory), culminating in the completion of your first mandatory sustainability report.   

Now that we’re officially into 2025, let's kick things off with a countdown of our top tips for the year. We’ll start with number 10 and work our way to the top one – all designed to help you get ready for mandatory sustainability reporting.  

Tip 10: Consider data and technology considerations early 

In your journey towards mandatory sustainability reporting, early preparation of data and technology considerations is key.   

Stakeholders, including customers, suppliers, and investors, will require specific data to measure their own carbon footprint and fulfil their sustainability reporting obligations. Banks, super funds, and key customers are increasingly requesting detailed information due to new sustainability reporting requirements. Responding to these requests promptly and accurately is essential. 

Consider the entities within your value chain. Determine what information you need from them to comply with sustainability reporting requirements and incorporate this data into your carbon footprint. Engage with these entities early to ensure they can provide the necessary data. 

Being proactive about data demands from stakeholders and your value chain is a great place to start preparing to comply with sustainability reporting requirements.  

Tip 9: Invest in education and knowledge transfer 

Investing in education and knowledge transfer is necessary to ensure your sustainability journey is watertight. In the fast-paced world of sustainability, keeping track of all the requirements and standards, both globally and in Australia is challenging even for the most eager sustainability expert. 

Educating your organisation on all things sustainability is an important responsibility and needs to be prioritised. This includes educating the board, executives, finance team, and the broader organisation about sustainability and its importance. 

It's one thing to develop your sustainability roadmap and comply with legislative requirements, but it's equally important to focus on foundational knowledge to ensure a robust understanding and to upskill your key sustainability team members - see Tip 5: Assign responsibility for sustainability below. 

There is no shortage of information available, and it can feel quite overwhelming. That's why it's important to partner with the right sustainability expert to guide you on your journey or at least validate your plans and priorities. 

We can help. We offer a wealth of resources, including monthly future-focussed webinars, plus a back catalogue of previous webinars and related presentations. We have roadmaps and checklists which can guide you on your journey. 

Also, coming again in March 2025, our popular Carbon Accounting Masterclass will be held in a capital city near you. 

Tip 8: Beware the risks of greenwashing 

Sustainability reporting encompasses more than just environmental credentials. It's crucial to ensure that any data or targets you publish, such as your carbon footprint, are accurate, assurance-ready, and substantiated. If stakeholders question your published information, you must be able to support it with credible data. 

Greenwashing, or making misleading claims about environmental practices, is a significant risk for organisations. This risk is likely to grow as organisations that haven’t previously prepared mandatory sustainability reporting look to comply with these new requirements for the first time.  

A 2023 review by the ACCC found that 57% of 247 websites made concerning claims about their environmental credentials. This highlights the importance of scrutinising the sustainability information you publish.

Organisations should regularly review their websites to ensure that sustainability claims are accurate and verifiable. This includes checking the credibility of information related to carbon footprints and sustainability targets. The credibility of your website's information should match that of your mandatory sustainability reports. 

To avoid greenwashing, ensure that all sustainability claims are backed by robust data and processes. Some best-practice organisations already voluntarily reporting keep a register, which itemises each claim, fact or data point within their sustainability report to a corresponding data source. This helps maintain trust and credibility not only with your assurance provider but also builds confidence within your organisation and with your stakeholders. 

Tip 7: Understand what assurance-ready really means 

In the first year of mandatory reporting, certain aspects will be subject to assurance, and by the second year, everything will be. So, how do you ensure your information is assurance-ready? 

The Australian Auditing and Assurance Standards Board has phased in assurance requirements for mandatory sustainability reports, in alignment with IFRS S2 or AASB S2. It's crucial to understand the difference between limited assurance (a high-level review) and reasonable assurance (an extensive audit). 

When measuring your carbon footprint, ensure completeness by including all seven greenhouse gases specified in the GHG Protocol. Auditors will first ask for your basis of preparation or carbon accounting methodology. Without proper documentation, the audit cannot proceed. 

Key considerations for assurance include: 

• Identifying all greenhouse gases and ensuring compliance with the GHG Protocol 
• Aligning Scope 1 and Scope 2 measurements with the GHG Protocol 
• Reconciling carbon data with the general ledger for an efficient audit 
• Using technology that provides a clear audit trail 
• Documenting all processes, remember, as ASIC emphasises, "if it's not documented, it's not done." 

For other climate-related disclosures required by AASB S2, auditors will review your process for identifying physical and transition risks. Make sure you have thorough documentation, including meeting agendas, minutes, and input from across the business. 

A 10-step approach to assurance readiness 

BDO Global, led by our national sustainability leader, Aletta Boshoff, has developed a comprehensive carbon accounting methodology that includes 10 key steps. These steps guide you from determining whether your GHG emissions disclosure is mandatory or voluntary (Step 1) to reporting emissions (Step 10). 

One critical aspect of this methodology that often presents challenges is preparing a basis of preparation – a process that spans from step 1 to step 7. By following the steps in the diagram, you can ensure that your organisation is fully prepared for assurance and aligned with the required standards.  

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Adhering to these structure steps will get you well on your way to making your sustainability data and processes assurance-ready. 

Tip 6: Understand your mandatory obligations 

With mandatory sustainability reporting now effective 1 January 2025, it's more important than ever to understand your obligations. But don’t overlook that some mandatory sustainability requirements have already been in place for a few years now, and they’re only growing in scope and importance. 

For example, the Modern Slavery Act, introduced in 2018, requires Australian entities with an annual consolidated revenue of at least $100 million to publish a modern slavery statement on their website and file it with the regulator. Similarly, the Payment Times Reporting Scheme, which started in 2021, mandates that organisations with an annual income exceeding $100 million report their payment times to ensure suppliers are paid promptly. 

Another important requirement is Workplace Gender Equality Agency (WGEA) reporting, which applies to employers with 100 or more employees. These organisations must register with the WGEA and report on gender equality metrics. 

While these regulations are already in place, the key difference with the new mandatory sustainability reporting requirements (that is, climate-related disclosures) is that they will be part of your annual report, available to investors, the public, and subject to assurance. This means a much higher level of scrutiny – and visibility – for your sustainability efforts. 

Tip 5: Assign responsibility for sustainability 

Clear ownership is essential to driving meaningful sustainability change. Assigning responsibility is not just a formality; it’s the first step to ensuring your sustainability efforts are taken seriously and implemented effectively. 

In many organisations, this responsibility falls to the CFO or head of finance – given that sustainability reporting will eventually become part of the annual report, which is subject to audit and assurance. The CFO is typically well-versed in this process, making them the ideal candidate to ensure the report is both comprehensive and assurance-ready. 

But the CFO doesn't do this in isolation. Sustainability efforts require input from various departments, including legal, people and culture, and operations, to ensure a holistic approach. It’s also the board’s responsibility to set the tone and delegate oversight, often through the Audit and Risk Committee, with the CFO leading at the executive level. 

Surveys show that many CFOs are now recognised as key players in sustainability, not just for managing risks, but for driving strategic ESG initiatives. In fact, they’re increasingly seen as champions of sustainability, helping to integrate ESG principles into the core of business operations and ensuring that sustainability efforts are aligned with mandatory reporting requirements. 

Tip 4: Get the board onboard 

Getting the board fully engaged with sustainability initiatives is necessary for success. As the tone setters at the top, board members need to be aware of upcoming mandatory requirements, strategic priorities, and value drivers. Without their backing, the CFO, executives, and sustainability teams will face significant challenges. Their support is key to ensuring your organisation is ready to meet sustainability goals and mandatory reporting requirements. 

The board should establish clear oversight responsibilities and decide which committee - such as the Audit and Risk Committee - will manage sustainability efforts. It's essential to clarify who is accountable, how risks will be identified and monitored, and what controls will be in place for decision-making and reporting. Establishing accountability at the executive level ensures your sustainability strategy is effectively driven throughout the organisation. 

Tip 3: Define why you are addressing sustainability 

Clearly defining the "why" behind your sustainability efforts is critical for success. In today’s business environment, sustainability and sustainability reporting have become a key factor in securing capital. Whether accessing debt from banks, attracting equity from super funds and private investors, or meeting the demands of your market, customers, and employees, the “why” shapes how stakeholders perceive your business. 

Understanding the true value of sustainability initiatives helps you align with these needs. While mandatory reporting and assurance service is the “stick”, recognising the broader strategic benefits provides the “carrot” that drives long-term success. 

Take time to assess where your organisation fits within the sustainability ecosystem. Understand the expectations of your suppliers, customers, investors, and employees. This clarity will not only guide your sustainability efforts but ensure they’re deeply embedded in your overall business strategy. 

Tip 2: Develop a roadmap and detailed project plan 

Creating a clear roadmap is the first step in preparing for mandatory sustainability reporting. Start by mapping out what needs to be done, when, and which financial year it applies. This high-level plan is essential, but it’s the detailed project plan that will drive successful implementation. 

For example, if you’re a Group 1 entity with a 30 June year-end, you’ll need to tackle various elements of mandatory reporting, such as Scope 1 and Scope 2 emissions and the broader requirements of IFRS S2. Essential actions might include conducting climate risk assessments, performing scenario analysis, developing financial models, and preparing a draft report for board review to ensure everything is aligned. 

Your detailed project plan should break the process into clear workstreams, set deadlines, outline key deliverables, and establish monitoring mechanisms. This level of detail is crucial to stay on track and ensure you’re ready to meet the mandatory reporting deadlines. 

BDO has developed a comprehensive roadmap to help clients navigate their sustainability journey. Our team is ready to support you in developing a tailored sustainability strategy and project plan to ensure you meet all requirements and deadlines effectively. 

Tip 1: Start measuring your carbon footprint 

Measuring your carbon footprint is the first and most critical step in your sustainability journey, and there’s a reason it’s Tip #1. Whether you’re approaching sustainability from a strategic, commercial, or regulatory standpoint, carbon accounting is essential. Today, clients, investors, and regulators demand transparent data on your environmental impact. 

Start by familiarising yourself with the GHG Protocol Accounting and Reporting Standard, which offers a comprehensive framework for measuring carbon emissions. This protocol divides emissions into three categories:  

• Scope 1: Direct emissions from your operations 
• Scope 2: Indirect emissions from purchased electricity 
• Scope 3: All other indirect emissions. 

There are 20 specific categories across these scopes, each with its own data collection and reporting methodologies. Understanding these categories and how to measure them will form the foundation of your sustainability reporting. 

If you’re looking for expert guidance, we’re offering our highly regarded Carbon Accounting Masterclass in March 2025 across Brisbane, Melbourne, Sydney, Perth and virtually. This one-day workshop will provide a comprehensive understanding of carbon accounting and equip you with the tools to meet the evolving sustainability reporting requirements.  

Get support 

The sustainability reporting landscape is evolving rapidly, making it challenging for organisations to stay current and determine where to begin with mandatory reporting. If you need assistance developing a plan, contact us.