Understanding mandatory ASRS climate reporting groups: what you need to know - 100% Renewables

Understanding mandatory ASRS climate reporting groups: what you need to know

[Updates: 16 April, 2024] – This blog post has been updated to reflect different criteria of the group classification and additional notes about the requirements of Group 3 companies, SMEs and charities.]

 

Welcome back to our detailed series on navigating the Australian Sustainability Reporting Standards (ASRS). In this blog post, we’ll unpack how Australian companies are categorised into groups for ASRS compliance, and we’ll explain why recognising your group is crucial due to differing reporting timelines.

In this video, join Barbara Albert, our Co-CEO, as we clarify the cohort system under ASRS, detailing criteria for each group and their significance in setting your reporting schedule.

Previous in the series

If you haven’t yet, be sure to explore the fourth blog post in our ASRS series, where we explore the specific reporting requirements under ASRS. This foundational knowledge is essential as we further discuss the categorisation of businesses into reporting groups.

Group breakdown under the mandatory ASRS climate legislation

The ASRS framework categorises businesses into three main cohorts, each with distinct criteria, but with organisations being those that are required to report under Chapter 2M of the Corporations Act. The size thresholds are based on existing concepts in the Corporations Act and Regulations. That is, consolidated gross assets, consolidated revenue and employee thresholds which apply to the company or entity and any entities it controls at the end of the financial year.

1️⃣Group 1 – largest entities and NGER reporters above the publication threshold. A group 1 entity is any of the following:

➡️The organisation meets at least two out of three conditions: over 500 employees, more than $1 billion in consolidated gross assets, or over $500 million in consolidated revenue.

➡️The Organisation is a registered corporation under the NGER Act and meets the NGER publication threshold (see below).

2️⃣Group 2 – second largest entities, asset owners and all other NGER reporters. A group 2 entity is any of the following:

➡️The organisation meets at least two out of three conditions: over 250 employees, $500 million in assets, or $200 million in revenue.

➡️The organisation is an NGER reporter not captured in Group 1.

➡️The organisation is an asset owner (registered scheme, registrable superannuation entity, or retail CCIV) where the value of assets at the end of the financial year (including the entities it controls) is equal to $5 billion or more.

3️⃣Group 3 – all other in-scope entities:

➡️The organisation meets at least two out of three conditions: over 100 employees, $25 million in assets, or $50 million in revenue.

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Below, you can see all group criteria next to each other. Your group determines when you have to start reporting. The phased timeline means Group 1 reports first, with Groups 2 and 3 following. This staggered approach will allow for a phased implementation, giving businesses adequate time to prepare based on their size and capacity.

Figure 1: Summary of phased reporting approach for ASRS groups
Figure 1: Summary of phased reporting approach for ASRS groups

More information on smaller entities and charities

ACNC-registered charities and (most) SMEs are excluded from the proposed new regime. The Explanatory Memorandum states that where an entity is not covered by the above criteria (e.g., not generally required to report under Chapter 2M, or does not meet the above tests), they are not required to prepare a sustainability report for a financial year.

Despite the fact that most SMEs are excluded from the proposed ASRS, the Australian Securities and Investments Commission (ASIC) has cautioned that even if entities are not directly in scope of the new requirements, they may still be impacted indirectly. ASIC states:

This means that those businesses (i.e., businesses that are not directly in scope of the new requirements) are not expected to have any direct reporting requirements in the immediate future. However, many small businesses form part of the supply chain of larger businesses, which means they may need to engage with climate reporting considerations over time, even if they do not have any direct climate reporting obligations. This is because the ‘scope 3’ emissions of a large business with reporting obligations may include the emissions of its small business suppliers. Scope 3 emissions are those emissions that occur up or down a company’s supply chain.

You can find more about this in this blog post.

ASIC has flagged that once the new requirements are in effect, it expects to work with small business representatives to develop practical guidance for small businesses in relation to the requirements of the new laws and how the new laws may impact them.

More information on asset owners

Asset owners are not required to prepare sustainability reports unless they are significant greenhouse gas emitters or consume large amounts of energy (indicators of relatively high exposure to climate risk). That is, asset owners below the corporate size thresholds are not required to prepare reports unless they are NGER reporters.

More information on the NGER thresholds

The National Greenhouse and Energy Reporting (NGER) scheme in Australia sets specific thresholds for businesses regarding the reporting of scope 1 and 2 greenhouse gas emissions, energy production, and energy consumption. The reporting thresholds under the NGER scheme are as follows:

1️⃣Corporate group thresholds:

➡️50,000 tonnes or more of CO2-e greenhouse gas emissions (scope 1 and scope 2).

➡️200 terajoules or more of energy consumption.

➡️200 terajoules or more of energy production.

2️⃣Facility thresholds:

➡️25,000 tonnes or more of CO2-e greenhouse gas emissions (scope 1 and scope 2).

➡️100 terajoules or more of energy consumption.

➡️100 terajoules or more of energy production.

Businesses that meet or exceed these thresholds are required to register and report annually to the Clean Energy Regulator. This includes both public and private companies, government organisations, and other entities operating in Australia.

Phased reporting timelines

Your ASRS cohort not only dictates the specific disclosures you’ll need to prepare and eventually get assured but also determines when your business must start reporting. The Australian Accounting Standards Board (AASB) has proposed a phased timeline approach, allowing companies to gear up for compliance based on their classification. Group 1 entities will lead, with Groups 2 and 3 following in succession.

Next in the series

Stay tuned as our next blog post zooms in on these timelines, offering a detailed guide to help you plan your ASRS compliance effectively. Preparation is key, and a clear understanding of your reporting obligations will enable a smoother transition to meet ASRS standards.

Conclusion

Identifying your business’s cohort is a critical step towards ASRS compliance, ensuring you’re well-prepared for the upcoming reporting obligations. At 100% Renewables, we’re here to help your business navigate these requirements, aiming not just for compliance but for leadership in climate resilience and sustainability. Whether it’s providing carbon footprint assessments, identifying climate-related risks and opportunities, establishing targets, or developing transition plans, we’re dedicated to supporting you every step of the way.

For personalised assistance in understanding ASRS compliance and determining your cohort’s specific needs, reach out to us at 100% Renewables. Let’s work together to elevate your climate-related reporting and sustainability practices.

ASRS Complimentary Course

In our ongoing dedication to assist businesses in their sustainability endeavours, we’ve revamped this multi-part blog and video series into a complimentary online course. Alongside the video content, the course offers additional resources and quizzes designed to enhance your comprehension of the ASRS.

Kickstart your journey towards mastering the ASRS. Join now by following this link. Don’t hesitate to share this opportunity within your network to collectively advance the climate agenda.

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