FY27 Is (Almost) Here: What the New Financial Year Means for Mandatory Climate Reporting

As organisations set priorities and budgets for FY27, climate-related financial disclosure is moving from a future requirement to a present-day reality.

Since 1 January 2025, Australia's mandatory climate reporting regime has applied to the first cohort of large entities. Now, with the start of FY27, many more organisations are turning their attention to what comes next and whether they are ready.

For businesses approaching reporting thresholds, the new financial year presents an opportunity to move beyond awareness and begin building the systems, governance and data needed for effective disclosure.

Who needs to report and when?

Australia's mandatory climate-related financial disclosure regime is being introduced in phases. Group 1 entities began reporting for financial years commencing on or after 1 January 2025. Group 2 entities commence from 1 July 2026 (next week), with Group 3 entities following from 1 July 2027.

Even organisations not yet captured directly may feel the effects sooner. Investors, customers and supply chain partners are increasingly seeking climate-related information from suppliers and contractors as they prepare their own disclosures.

In practice, climate reporting is quickly becoming a business expectation, not simply a compliance exercise.

What about the Federal Budget?

The recent Federal Budget signalled the Government's intention to reduce the reporting burden and simplify some aspects of financial and sustainability reporting.

Among the proposed changes are increases to the thresholds that determine whether proprietary companies are considered "large", potentially reducing the number of entities captured under reporting requirements. The Government has also flagged consultation on refinements to climate reporting requirements and group reporting arrangements.

Importantly, these measures do not delay or remove mandatory climate reporting. The direction of travel remains clear: organisations will increasingly be expected to understand, manage and disclose climate-related risks and opportunities. For businesses preparing for disclosure, the message is simple... continue preparing

What should organisations be doing now?

As FY27 begins, organisations should be asking themselves five key questions:

• Do we understand whether and when we are in scope?

• Do we have reliable emissions data across Scopes 1 and 2, and the relevant Scope 3 categories?

• Have we identified our material climate-related risks and opportunities?

• Is governance clearly established across sustainability, finance and risk functions?

• Have we assessed gaps between our current reporting practices and future disclosure requirements?

  
  

Preparing for climate reporting requires more than a reporting framework. It demands robust data, clear governance and a strong understanding of how climate risks and opportunities may impact business performance.

For many organisations, this means establishing or improving GHG emissions inventories, undertaking carbon footprinting, conducting climate disclosure gap analyses and developing credible pathways to reduce emissions over time. Even businesses that are not yet directly in scope may find themselves responding to requests for emissions data from investors, customers and supply chain partners.

From compliance to value creation

While climate reporting may begin as a regulatory requirement, leading organisations are already using it to drive better decision-making, strengthen resilience and demonstrate value to stakeholders.

Initiatives such as Climate Active certification, B Corp certification and voluntary climate reporting can help organisations build capability ahead of mandatory requirements while demonstrating leadership in sustainability.

FY27 marks an important milestone in Australia's transition to climate disclosure. The organisations that invest in strong data, governance and reporting processes today will be best placed not only to comply, but to create long-term value in a low-carbon economy.

Need support preparing for climate reporting? We help organisations build robust emissions inventories, undertake carbon footprinting, conduct gap analyses and develop evidence-based strategies that support credible climate disclosures.

Get in touch today.