Sustainability reporting in Australia: A strategic imperative for SMEs

In Australia, recent legislative changes mean certain businesses now need to disclose their environmental, social, and governance (ESG) practices. 

Sustainability reporting gives SMEs a strategic edge. It reveals operational risks, drives efficiency, and prepares businesses for tightening regulations. It also signals to investors and customers that the business is transparent, responsible, and ready for the future.

In this article, PKF Adelaide breaks down what a sustainability report in Australia entails, how to compile one, why auditing matters, and how we help businesses navigate this space.

What a sustainability report in Australia covers

Sustainability reporting in Australia is about sharing how your business impacts the world around it. It’s important to clarify that ESG (Environmental, Social, and Governance) and sustainability are not the same, though they are closely related. 

• Sustainability is the overarching goal of maintaining a balance between the environment, economy, and society for the long term.
• ESG is a specific framework and set of metrics used to measure and report a company's performance on environmental, social, and governance issues - especially for investors. 

In essence, sustainability is the philosophy or end goal, while ESG is the tool for measuring progress.

The Australian Accounting Standards Board (AASB) has introduced the Australian Sustainability Reporting Standards (ASRS), aligning local reporting with international frameworks like IFRS and the Task Force on Climate-related Financial Disclosures (TCFD). Businesses are expected to report on climate-related risks and opportunities, governance structures, strategy, risk management, and measurable targets.

Which companies need a sustainability report in Australia

Under the Corporations Act 2001, sustainability reporting is mandatory for certain entities. This includes:

Mandatory Reporting Entities: Companies required to prepare an annual financial report under Chapter 2M of the Corporations Act.

Entities meeting thresholds: Companies that meet any of the following:

• Consolidated revenue of $100 million or more
• Consolidated gross assets of $50 million or more
• More than 500 employees
• Registered corporations with emissions reporting obligations under the National Greenhouse and Energy Reporting Act 2007

The reporting requirements are being phased in, starting with financial years commencing on or after 1 January 2025, with additional cohorts in 2026 and 2027.

Even if your business doesn’t meet these thresholds, voluntary reporting by SMEs can be a strong differentiator for investors, customers, and stakeholders.

How to compile a sustainability report for your business

Compiling a sustainability report might sound intimidating, but breaking it down into steps makes it manageable. 

1. Materiality assessment: Identify and prioritise the ESG issues that matter most to your business and stakeholders.
2. Data collection: Gather quantitative and qualitative information on energy use, emissions, waste, and social impact.
3. Stakeholder engagement: Talk to employees, suppliers, investors, and other stakeholders to understand what matters to them.
4. Report development: Draft your report in line with ASRS, making sure it’s clear, accurate, and transparent.
5. Review and assurance: Conduct internal checks and consider external assurance from PKF to validate your data.
6. Publication: Share the report with stakeholders and make it publicly available where relevant.
   Following this process ensures your sustainability report gives a credible and comprehensive picture of your ESG performance.

Examples of what to include in a sustainability report in Australia

A strong sustainability report covers environmental, social, and governance metrics. Examples include:

Environmental

• Energy consumption across operations
• Greenhouse gas emissions (Scope 1, 2, and where possible, Scope 3)
• Water usage and waste management initiatives
• Sustainable sourcing and procurement practices

Social

• Employee health and safety, training, and retention
• Diversity and inclusion initiatives
• Community engagement and corporate social responsibility programs
• Ethical policies for customers and suppliers

Governance

• Board oversight and ESG accountability
• Risk identification and mitigation
• Compliance with laws, privacy, and ethics policies
• Transparency in reporting and stakeholder engagement

Including these areas ensures your report aligns with ASRS and demonstrates a genuine commitment to responsible and sustainable business practices.

PKF Australia’s role in sustainability reporting

PKF Australia provides end-to-end support for businesses preparing sustainability reports:

• Business advisory services: Helping businesses choose the right framework, conduct materiality assessments, and develop sustainability strategies.
• Data management: Implementing systems to collect, manage, and analyse ESG data efficiently.
• Report preparation: Drafting reports that comply with ASRS and other relevant standards.
• Audit and assurance services: Offering internal and external reviews to verify accuracy.
• Training and education: Providing guidance to build internal reporting capabilities.

Our team ensures sustainability reporting is robust, transparent, and practical, giving businesses a tool to strengthen stakeholder trust and strategic decision-making.

PKF Adelaide under PKF Australia is here to guide businesses through every step, from understanding requirements and compiling reports to auditing and assurance.

Sustainability reporting, when approached thoughtfully, reflects the enduring consequences of our decisions and embeds responsibility into the core of business practice.