Mandatory Climate Reporting (MCR) Services

Australian Government’s mandatory climate-related financial disclosures

• New reporting obligationsApplicability:
• Changes in 2023/24 to climate-related reporting: global and in Australia
• Key points for Australian organisations
• Implementation: disclosures and assurance rollout
• Your obligations: how we can help
• Questions?

New reporting obligations

As of the 1st January 2025, the Australian Government’s new mandatory climate-related financial disclosure requirements have come into effect. These measures aim to improve transparency about how climate risks and opportunities affect organisations.

It is essential for businesses to understand these obligations and prepare accordingly. While designed to reduce climate-related risks, these disclosures also open up new opportunities in an increasingly decarbonising market.

We provide Mandatory Climate Reporting (MCR) Services to help you plan and meet MCR requirements and timelines. Please read on.

Background on the legislation

At COP28 in UAE (November-December 2023) the Financial Stability Board (FSB) and the  International Financial Reporting Standards (IFRS) announced that the Task Force on Climate-related Financial Disclosures (TCFD) had fulfilled its remit and disbanded. The responsibility for climate-related financial reporting now sits with the International Sustainability Standards Board (ISSB). Globally, the IFRS Foundation monitors the progress of climate-related disclosures.

Now, Australia has brought in its own Mandatory Climate Reporting system (MCR). While TCFD had 11 disclosures, MCR has more than 100, bringing with it a material uplift in climate-related practices and levels of assurance.

Find more information about Australian Sustainability Reporting Standards here.

Also see:

• Treasury: Mandatory climate-related financial disclosures.
• Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
• ASIC’s interventions on greenwashing misconduct: 2023-2024.
• ASIC Regulatory Guide 280 on Sustainability Reporting (March 2025).

Key points for Australian organisations:

1. Rollout:

The rollout will be staggered across three groups, with each group having four years to ramp up to the full standard.

2. Applicability:
Entities that are required to produce an annual financial report under Chapter 2M of the Corporations Act, and that meet one of the sustainability reporting thresholds in section 292A, must also prepare a sustainability report for that financial year. More information can be found in the ASIC website.

3. Liability:
Treasury is limiting Directors’ liability for the first three years of implementation. Refer to the ASIC Regulatory Guide 280 for more details.

Implementation: disclosures and assurance

MCR obligations increase over a four-year period. The disclosures address key areas of ongoing process and capability uplift, each with progressively increasing levels of audit.

Indicative roll out

Group 1 entities with years commencing 1 January to 30 June will be subject to the Year 1 provisions twice (e.g. years commencing 1/1/25 and 1/1/26). Reporting of Scope 3 emissions is required for years commencing 1/1/26 to 30/6/26 for these Group 1 entities.​

**  Years commencing from 1/7/30 to 30/6/31 for Group 3 entities. From that time reasonable assurance is required by the Act for all mandatory climate disclosures. ​

*** The phasing for assurance on statements that there are no material climate-related risks and opportunities would be the same as for ‘Strategy – Risks and Opportunities’. ​

**** Only subparagraphs 9(a), 10(a) and 10(b) of AASB S2.

Above table is extracted from the AUASB ASSA 5010.

The AUASB is responsible for the audit roll out and the audit standard. The above table shows how the audit regime is evolving from no assurance, to limited to reasonable assurance over the four year roll out time frame.

Your obligations: how we can help

MCR is based on the four pillars of Governance, Strategy, Risk Management, and Metrics and Targets. Groups 2 and 3 may become involved early due to factors such as Group 1 value chain commitments, CRO analysis, Scope 3 disclosures or consumer expectations for greater transparency.

We advise our clients with reporting responsibilities to begin preparations as early as possible and to build up capability over three stages. Our MCR consultants can help on all the activities listed below, except for Assurance (as part of stage 3), which must be provided by your external auditor.

1. 1. 1. Planning: Timing, scope, disclosure gap analysis, and planning.
      2. Implementation: Governance and risk processes, strategy (climate risks and opportunities), and metrics and targets.
      3. Reporting: Articulation of all disclosures, review, and audit.

Our Climate-related Risks and Opportunities framework below is science-based and will ensure entities can accurately prepare for the future, as per legislative requirements.

Questions?

Contact us today about taking the first steps for your organisation. Talk to one of our climate specialists about an MCR consultation, presentation, or workshop. We take you through the processes, what to expect, and importantly, what questions you need to ask from your board, executives, and climate leaders.