Last week’s Federal Budget proposed doubling the revenue and gross asset thresholds that define a large proprietary company under the Corporations Act. If the legislation passes, fewer Group 3 entities will sit inside the ASRS net, and many mid-market boards have read this as reprieve.

These changes shift the formal compliance trigger but leave the commercial drivers of climate disclosure untouched. The case for reporting was never about the threshold, it rested on lenders, insurers, customers, and value-chain partners, as I have argued since AASB S2 first landed. Mandatory climate reporting in Australia is now a fixture of how businesses are assessed by those who lend to, insure, and buy from them.

What the Budget proposed

The proposed changes to the large proprietary company size thresholds are below. Entities meeting at least two of the three criteria would be captured. Employee count is unchanged.

Threshold	Previous threshold	Proposed threshold
Consolidated revenue	$50 million	$100 million
Consolidated gross assets	$25 million	$50 million
Employee headcount	100 or more	Unchanged at 100

If passed, entities below the revised thresholds would no longer need to lodge an audited financial report, a directors’ report, or a sustainability report with ASIC. For organisations only just tipping into scope, that removes the formal compliance obligation. The underlying business considerations that made climate disclosure relevant remain in place.

Three reforms in consultation

The Budget also confirmed the Government will consult on three reforms to the climate disclosure regime. These refine the regime rather than dismantle it.

Clarifying undue cost or effort

AASB S2 allows entities to omit Scope 3 categories where supplier data is genuinely unavailable. Guidance has been thin, as we set out when the standard first landed. Treasury will consult on clearer parameters. A regulator investing in better Scope 3 guidance is a regulator entrenching the requirement, not retreating from it.

Recalibrating assurance settings

Limited assurance over Scope 1 and 2 emissions and governance disclosures applies from year one, escalating to full reasonable assurance by 2030. The consultation reviews the calibration in between. The 2030 destination is unchanged. I wrote last April about the gap between reporting that exists and reporting that withstands scrutiny, and that gap is what assurance is built to close.

Clearer limits on supplier data requests

The Government will set clearer limits on how climate data requests flow through value chains, with small businesses explicitly named. Group 1 and Group 2 entities should review their supplier data requests now: blanket requests that dump compliance burden on smaller suppliers will not survive the next round of guidance. For suppliers on the receiving end, requests will continue in more proportionate form.

What isn’t shifting

The reporting timeline is unchanged. Group 1 entities are already reporting. Group 2 begins this July. Group 3 follows from July 2027.

Falling below a mandatory threshold moves the conversation from regulator-led to market-led, and market-led is the more demanding. Lenders are pricing climate risk into loan assessments. Insurers are evaluating asset and operational exposure. Group 1 reporters need supplier emissions data for their own Scope 3 disclosures. If your largest client is a Group 1 reporter, your emissions data is part of their compliance file, regardless of whether your revenue clears $100 million.

I made the case at the Avetta Sydney Summit last year that early action on sustainability pays off. The businesses that moved before they were forced to are the ones now winning and keeping large customers. This Budget sharpens the divide between businesses that read the regulation literally and businesses that read the market.

The climate-related financial disclosure that crystallises at the EOFY sits within the existing financial reporting framework. The Budget proposals do not touch it. Material climate impacts on the balance sheet still need to be assessed and disclosed where required, with or without a separate sustainability report.

The right question is no longer “are we still in scope?” It is what level of climate disclosure makes sense given who lends to you, insures you, and buys from you.

How ReGen can help

ReGen Strategic is a sustainability reporting consultant Australia-based businesses turn to when AASB S2 work needs to be done defensibly. As an AASB S2 consultant Perth based with a national footprint, we focus on the practical end of compliance: emissions data foundations through to the sustainability report itself.

We work with eco-shaper, an AI-powered sustainability reporting platform, to automate emissions data collection, calculation and management across Scopes 1, 2 and 3. The platform is GHG Protocol compliant and applies regionalised Australian emission factors for the location-based Scope 2 emissions AASB S2 requires.

We help organisations:

• Map and quantify Scope 1 and 2 emissions from year one
• Build out Scope 3 category coverage ahead of year two obligations
• Maintain a continuous, assurance-ready emissions dataset
• Translate emissions data into reduction strategy and transition planning
• Prepare AASB S2 sustainability reports across all four pillars: Governance, Strategy, Risk Management, and Metrics and Targets

Assurance applies from day one and robust data systems take time to build. The starting work is the same for an entity inside the threshold and one sitting just below it: get the inventory right, build supplier engagement, structure the data so an assurer can sign off.

My view

The Budget shifted who is required to lodge a sustainability report. It did not shift who needs one. Businesses that recognise this in 2026 will look very different to those that do not by 2028.

To talk through where your organisation sits, contact Colin Davies at colin@regenstrategic.com.au.