Am I a Group 3 entity? Climate reporting thresholds explained

Step 1: Do you have to prepare a Chapter 2M financial report?

Climate reporting sits on top of financial reporting. Section 292A(1)(a) only requires a sustainability report from an entity that must prepare a financial report for the year under Chapter 2M. Disclosing entities, public companies, large proprietary companies, registered schemes and registrable superannuation entities (RSEs) must prepare one (s292(1)).

ASIC lists entities that are outside the regime because they don’t have to prepare a Chapter 2M financial report. These include foreign companies registered under Part 5B.2, small proprietary companies with no Chapter 2M reporting obligations, registered charities that report to the ACNC instead, and entities relying on ASIC relief from preparing a financial report for the year (RG 280.48).

For most mid-sized private groups, the trigger is being a large proprietary company. The large proprietary company test in s45A(3) uses the same prescribed amounts as the Group 3 size test (reg 1.0.02B). So a proprietary company that meets the Group 3 size test is a large proprietary company for that year, and must prepare a financial report unless relief applies.

Step 2: Apply the two-of-three size test

You meet the Group 3 size test for a financial year if at least two of these apply (s292A(3); Corporations Regulations reg 1.0.02B; RG 280 Table 2):

Any two is enough. A services business with A$55m revenue and 140 staff is in, even if its balance sheet is light. A property group with A$80m of assets and A$30m revenue but 40 staff meets only one test, so it isn’t.

How the numbers are measured

• Consolidated. The figures are for the entity and the entities it controls. Control is decided under the accounting standards, and revenue and gross assets are calculated under the accounting standards, even if those standards don’t otherwise apply to every entity in the group (s292A(7)).
• Gross, not net. The asset test uses consolidated gross assets.
• Full-time equivalents. Part-time employees count as an appropriate fraction of a full-time equivalent (s292A(4)).
• Tested at year end. ASIC says the requirements “crystallise at the end of the financial year”, and that entities should have systems to assess their status even if they don’t meet the thresholds at the start of the year, because an acquisition, a restructure or a shift in market conditions can change it (RG 280.34).
• One report for a group. Where the accounting standards require consolidated financial statements, the parent can elect to prepare a single sustainability report for the consolidated entity (s292A(2)).

Are you Group 3, or Group 1 or 2?

Larger entities started earlier. Group 2 (financial years beginning 1 July 2026 to 30 June 2027) covers entities meeting two of A$200m revenue, A$500m gross assets or 250 employees, entities registered under the NGER Act or required to apply for registration, and registered schemes, RSEs and retail CCIVs with assets of A$5 billion or more (s1707B(1)(b); s296B(2), (4), (5); RG 280 Table 2). Group 1 used higher thresholds again (s1707B(2), (4)).

This matters because the short “no material climate risks or opportunities” statement in s296B(1) is only available to entities that aren’t caught by s296B(2), (4) or (5). ASIC describes this as being in “Group 3” (RG 280.74). Those tests are applied each financial year, so an entity that grows past the s296B(2) size limits in a later year can’t use the short statement for that year. Our guide to the s296B statement explains what it involves.

When does Group 3 start for you?

Group 3 applies to financial years commencing on or after 1 July 2027 (s1707B(1)(c)). Your first year depends on your year end:

The Group 3 timeline guide sets out the lodgement, declaration and assurance dates that follow.

The proposed threshold increase proposed, not law

The 2026–27 Budget regulatory reform fact sheet lists, as item 1: “Relieve reporting burden by raising monetary thresholds for large proprietary companies from $50 million to $100 million of consolidated revenue and $25 million to $50 million of consolidated gross assets.” Treasury’s consultation paper on climate disclosure efficiency (August 2026) said this would relieve “smaller Group 3 entities” from mandatory sustainability reporting, with timing then still to be confirmed (p. 5).

Treasury released a draft regulation for consultation on 19 October 2026 proposing that the higher thresholds apply from financial years starting on or after 1 July 2027 (Treasury consultation; exposure draft, Sch 2). As drafted, it would change reg 1.0.02B to A$100m revenue and A$50m gross assets and leave the employee number at 100 (exposure draft, Sch 1). Consultation closes 2 November 2026. Its explanatory statement notes that, because the same thresholds decide who reports, it would also reduce the number of smaller public companies that must prepare sustainability reports.

It is a draft and not yet law. It isn’t law until it is made and registered, and the final version may differ. Plan on current law, and run the test both ways so you know whether the change would affect you.

A practical checklist

1. Confirm the entity must prepare a Chapter 2M financial report, and whether any ASIC relief applies.
2. Forecast consolidated revenue, consolidated gross assets and FTE employees for the end of your first possible Group 3 year.
3. Check NGER status and the Group 1 and Group 2 tests, which decide whether s296B could be available.
4. Re-test on actual figures at year end, and again after any acquisition or restructure.
5. Keep the workings, the figures used and who checked them.

Our free “Am I Group 3?” tester applies these rules in your browser, shows your first Group 3 year, and has a switch to see the result under the proposed thresholds. Nothing you enter leaves your browser.

Frequently asked questions

We have A$60m revenue, A$20m gross assets and 80 employees. Are we in Group 3?

Not under current law. You meet only the revenue test, and you need two of the three. Re-test at year end, because the position is fixed by the year-end figures (RG 280.34).

Do part-time employees count?

Yes. Part-time employees are counted as an appropriate fraction of a full-time equivalent (s292A(4)).

Has the higher A$100m / A$50m threshold become law?

Not as at 22 October 2026. Treasury released a draft regulation for consultation on 19 October 2026 proposing that the higher thresholds apply from financial years starting on or after 1 July 2027. It is a draft and not yet law. Consultation closes 2 November 2026.

If we are in Group 3, do we have to make full climate disclosures?

Not necessarily. If an assessment under AASB S2 finds no material climate-related financial risks and no material opportunities, a Group 3 entity can lodge the short statement allowed by s296B(1) instead. It still needs records, a directors’ declaration and auditor assurance.

Sources

Pinpoints in this guide: “s” is a section of the Corporations Act 2001; “reg” is a regulation of the Corporations Regulations 2001; “RG 280.x” is a paragraph of ASIC Regulatory Guide 280. All sources were opened and checked on 22 October 2026.

1. Corporations Act 2001 (Cth), current compilation, Federal Register of Legislation
2. Corporations Regulations 2001 (Cth), reg 1.0.02B, Federal Register of Legislation
3. ASIC, Regulatory Guide 280 Sustainability reporting (March 2025)
4. Budget 2026–27 fact sheet, ‘Whole-of-Government Regulatory Reform Agenda’
5. Treasury consultation, ‘Improving the efficiency of climate-related financial disclosures’ (23 August – 5 October 2026), including the consultation paper
6. Treasury consultation, ‘Raising the reporting threshold for large proprietary companies’ (opened 19 October 2026, closes 2 November 2026), with the exposure draft regulation and explanatory statement

More guides

• What is a s296B no material climate risk statement?
• How to assess climate materiality for a Group 3 company (step by step)
• Group 3 climate reporting timeline and key dates
• All guides