Reading the Group 1 disclosures: what survived assurance, and what didn't

We are witnessing a once-in-30-year shift in accounting standards for financial reporting, and that changes the conversation.

For years, sustainability reporting lived in a space where effort and intent carried weight. That's no longer the case. The market has moved on; expectations have shifted and tightened.

Boards and executives are now signing annual reports that include climate disclosures, and the regulation — originally driven by the investment community — is demanding a new level of discipline. Disclosures must now be consistent, comparable, and, most critically, explainable.

It's no longer enough to say something credible. You now need to show how you got there.

What the strongest reports had in common

When you look across the disclosures that held up well, a pattern emerges. It's not about who had the most data or the most polished narrative. It is about structure — ensuring that everything is connected. In the stronger reports, nothing sits in isolation. Governance links to risk, risk links to strategy, and strategy links to financial thinking.

You can follow the thread from board-level oversight through to the final disclosure. It feels like a system rather than a document assembled at year-end.

The process is explainable, recognising that the strongest reports are not perfect. You can see how assumptions are made, what methodologies are being used, and where judgement has been applied.

And importantly, someone could walk you through it. That's the difference between presenting a number and standing behind it.

Climate is embedded into financial thinking, and this is where the real separation showed up.

In stronger disclosures, climate isn't treated as a parallel narrative — it is embedded. Perhaps not fully quantified in every case, but clearly influencing how the business thinks about resilience, performance, and future position.

Where reports struggled under scrutiny

The reports that require rework show a different pattern. Not a lack of effort, but a lack of structure underneath. There are four themes emerging from the ASIC review (opens in new tab) of the 260 companies that reported at 31 December 2025.

1. 01
   Boilerplate narratives…

   that could belong to almost any organisation. Using generic climate language, including high-level commitments and well-worded governance descriptions. Very little that is truly entity-specific — which means it becomes difficult to defend when assurance moves beyond surface-level review.

2. 02
   Assumptions not visible…

   and disclosure is disconnected from the business.

3. 03
   Scenario analysis without disclosure…

   of the supportive thinking. Clearly showing a gap in connecting to assumptions used, not articulating why those scenarios are relevant and importantly what changes between them.

4. 04
   Climate sitting outside finance…

   one of the most consistent pressure points. This leads to disclosures not connecting to forecasts, capital allocation, or long-term resilience.

What assurance is actually testing

One of the more important insights from this first wave is what assurance is really looking for, and it's not perfection. Most organisations are still early in their journey, and that's understood — we hear, "don't let perfection get in the way of progress."

What is being tested is something more fundamental. It's about the process of how companies get to the climate disclosures. Can the process be explained, and is it repeatable? Is there clear governance in the system? What about the key assumptions underneath the disclosures — can they be defended, supported by evidence through data? And, importantly, is the climate story internally consistent with decisions being made using those assumptions?

If these elements are in place, organisations can build over time. If they're not, the gaps become visible very quickly.

The emerging CFO challenge

This is where the ownership of the conversation shifts. Climate reporting is starting to behave much more like core financial reporting.

It now sits alongside impairment-style thinking, scenario modelling with long-term estimation, and consideration of strategic risk disclosure.

Which means it's no longer just a sustainability exercise. It's asking finance teams to take historic knowledge of the business and extend it into forward-looking scenarios — across multiple time horizons — in a way that is specific to the entity. That's a different level of accountability.

The signal now for Group 2 entities

There is a clear advantage for Group 2 entities to remove friction and take the time to build the underlying systems from the start. You can see where the first wave encountered friction, and you have the opportunity to respond with intent rather than urgency.

Given your reporting date starts with financial years from 1 July 2026, the first requirement might be to ensure your Board, Executives, and leadership teams understand what the regulation requires.

This is the window to build properly. To establish the underlying systems, to embed governance, and to ensure that climate considerations are genuinely influencing decision-making across the organisation. This is not a year-end exercise — it is a build that takes place over time.

Those who leave it to the last minute will feel the pressure of year-end compression. Those who start now will build something far more robust, able to scale when further standards evolve, and will have climate reports far more defensible.

The first wave of sustainability reporting has shown us something important.

Assurance does not reward volume, ambition, or terminology — it rewards structure, governance, and explainability. The organisations that succeed over the next three years will not be those producing the longest disclosures, but those building the most defensible reporting architecture.