For years, ESG reporting in Australia was the domain of the eager and the enlightened. Boards added it to their annual reports when they had good stories to tell, and quietly omitted it when they did not. That era is over.

Following the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, mandatory sustainability reporting is now law in Australia, with the first cohort of large businesses required to prepare annual sustainability reports for financial years commencing on or after 1 January 2025. The remaining cohorts follow in 2026 and 2027. This is not a soft-touch voluntary framework. Non-compliance penalties mirror those for financial reporting under the Corporations Act, and directors may face personal liability for misleading statements in sustainability reports, with penalties of up to $15 million or 10 per cent of annual turnover. ASICAnthesis Global

For anyone advising businesses on reputation, this changes the conversation significantly.

Who Is In, and When

The legislation uses a phased, tiered model that brings in organisations by size over three years. Group 1 covers entities with 500 or more employees, $500 million or more in revenue, or $1 billion or more in assets, and large asset owners, with reporting obligations starting from financial years beginning 1 January 2025. Group 2 captures entities with 250 or more employees, $200 million or more in revenue, or $500 million or more in assets, commencing from 1 July 2026. Group 3 brings in entities with 100 or more employees, $50 million or more in revenue, or $25 million or more in assets, from 1 July 2027. SMALL BUSINESS CEO

Not-for-profits that meet the same thresholds are included within this regime, while charities and certain public authorities are exempt. K&L Gates

It is worth pausing on what Group 3 actually captures. A business turning over $50 million with 100 staff is not a micro-enterprise. This is a substantial portion of Australia’s mid-market, firms that have historically operated with limited formal sustainability infrastructure, and the clock for many of them is now ticking.

What Must Be Disclosed

The reporting framework is built on AASB S2, Australia’s climate-specific standard, which closely mirrors the international IFRS S2. Disclosures are structured around four core content areas: governance, strategy, risk management, and metrics and targets. Entities must disclose absolute gross Scope 1, Scope 2, and Scope 3 greenhouse gas emissions. Carbonhalo

The climate component is mandatory for in-scope entities from 2025 onwards. Broader ESG reporting covering social and governance topics remains voluntary for most Australian entities, though it is strongly encouraged by ASX Corporate Governance Principles and increasingly expected by institutional investors and lenders as a condition of capital access. Carbonhalo

That last point matters. Regulatory compliance is the floor. What investors, lenders, procurement teams, and the media do with that disclosed information is an entirely separate question, and it is one that many organisations are not yet thinking about clearly enough.

Where Reputation Enters the Room

Mandatory reporting creates a permanent, publicly accessible, audited record of how a business manages climate risk. ASIC has emphasised that climate-related financial information that is consistent, comparable, and of high quality facilitates confident and informed decision-making by investors and other users of that information. In plain terms, your sustainability report will be read, compared, and judged. ESG News

This is where public relations professionals have a substantive role to play, and where too many organisations are currently under-invested.

The gap I see repeatedly is between the compliance exercise and the communications strategy. Organisations pour resources into getting their data right, their Scope 3 calculations defensible, and their audit sign-off secured. Then they lodge the report, add a press release, and move on. That is a missed opportunity of the first order.

A sustainability report is a reputational asset. It tells a story about governance maturity, leadership credibility, and long-term thinking. Done well, it positions an organisation as one that understands the risks its business faces and is managing them with rigour and transparency. Done poorly, or without strategic communications wrapped around it, it becomes either invisible or, worse, a document that invites scrutiny your team is not ready to respond to.

The Greenwashing Risk Is Real and Growing

The corollary of mandatory disclosure is mandatory scrutiny. As more organisations publish standardised, audited data, comparisons become inevitable. Journalists, activist groups, institutional investors, and regulators will be equipped to hold companies to account in ways that were not possible when disclosure was voluntary and inconsistent.

ASIC has made clear that false or misleading climate statements could result in significant penalties, with directors personally liable for the content of sustainability reports. But reputational damage often precedes legal consequence. A company that has published aspirational net-zero commitments without the underlying strategy to support them will now find those commitments sitting in a formal, audited document, subject to comparison against actual performance year on year. Anthesis Global

This is not a warning to say less. It is an argument for saying what is true, clearly, and with genuine transparency about both progress and gaps. Authenticity in sustainability communications is not just ethically correct, it is strategically sound.

What Strong Reputational Outcomes Actually Look Like

Organisations that use ESG reporting as a reputational lever rather than a compliance burden tend to share a few characteristics.

They start the communications work early, before the report is lodged, not after. They identify the two or three themes within their disclosure that are genuinely differentiated, whether that is supply chain transparency, governance innovation, or a credible transition plan, and they build a narrative around those themes with evidence.

They brief stakeholders proactively. Analysts, key clients, industry associations, and media contacts do not need to discover your sustainability report by accident. A strategic briefing programme, timed to coincide with lodgement, ensures the right people receive the story in context.

They train their spokespeople. The sustainability report may be signed off by the CFO, but journalists and investors will seek comment from the CEO. Organisations that cannot articulate their ESG position in plain, conversational language, without jargon and without defensiveness, tend to find themselves on the back foot when questions become pointed.

And they treat the report as one piece of an ongoing narrative, not an annual event. The credibility built through consistent messaging across media, LinkedIn, industry publications, and client communications compounds over time. One well-constructed sustainability report is valuable. Three years of consistent, evolving communications around it builds genuine reputation capital.

The Moment Is Now

With Group 2 obligations commencing from July 2026, a substantial wave of mid-market Australian businesses is in the final stretch of preparation. Many are focused, rightly, on data systems, governance frameworks, and audit readiness. But the reputational dimension deserves equal attention.

The organisations that will emerge from this transition with a stronger market position are those that treat ESG reporting not as an obligation to be managed, but as a platform from which to demonstrate leadership. That requires disciplined communications strategy, clear narrative, and the courage to be genuinely transparent.

Compliance gets you in the room. Reputation is what you build once you are there.

Amanda Lacey is the founder and director of Popcom, a boutique PR and strategic communications agency specialising in reputation management, media strategy, and executive visibility for professional services firms. She works with legal, financial services, and accounting clients to build the kind of credibility that holds up under scrutiny.