July 2026 Climate Reporting Starts for Group 2: The Timely Australian Accounting Topic Practices Need to Act on Now

For July 2026, the most relevant and timely topic in Australian accounting is not another routine tax-time reminder. It is the next major phase of Australia’s mandatory climate reporting regime.

From financial years commencing on or after 1 July 2026, many Group 2 entities will be required to prepare mandatory climate-related financial disclosures under Australia’s new sustainability reporting framework. While the obligations apply directly to larger entities, the practical impact will flow quickly to accountants, bookkeepers and small business clients through audit requests, bank finance reviews, tender requirements and supplier questionnaires.

This is a July 2026 issue because affected entities are starting their first reporting period now. If systems are not in place from day one, reconstructing emissions, energy, fuel, fleet, lease and supplier data in 12 months’ time will be difficult, expensive and prone to error.

Why July 2026 matters for Australian accounting teams

Australia’s mandatory climate reporting framework is being phased in across three groups. Group 1 entities began for reporting periods commencing from 1 January 2025. The second wave is now arriving for periods commencing from 1 July 2026.

For accountants and advisers, this creates a new compliance workload that sits between financial reporting, tax governance, audit, risk management and operational data collection. It is not just an ESG issue. It is an accounting records issue.

Climate disclosures require reliable source data, documented assumptions, internal controls and evidence trails. That means finance teams need to capture and reconcile the underlying business activity now, not after year-end.

Which entities are likely to be Group 2 from 1 July 2026?

Under the phased Australian regime, Group 2 generally captures entities that meet at least two of the following size thresholds:

• Consolidated revenue: $200 million or more
• Consolidated gross assets: $500 million or more
• Employees: 250 or more

Group 2 may also include certain entities covered by National Greenhouse and Energy Reporting obligations, depending on their circumstances. Accountants should confirm the latest legislative and regulatory position for each client, particularly for consolidated groups, foreign-owned Australian subsidiaries and entities near the thresholds.

Smaller businesses may look at these numbers and assume the rules are irrelevant. That would be a mistake. Many SMEs will be asked to provide climate-related information because they supply goods or services to reporting entities. For example, a transport subcontractor, commercial cleaner, manufacturer, construction supplier or professional services firm may receive requests for fuel usage, electricity consumption, business travel or emissions-related data as larger customers prepare their own disclosures.

What must be reported?

The mandatory reporting framework is built around climate-related financial disclosures, including governance, strategy, risk management, metrics and targets. In practice, accountants should expect clients to need records supporting areas such as:

• Scope 1 emissions, including direct fuel use, company vehicles, plant and equipment
• Scope 2 emissions, including purchased electricity and energy contracts
• Selected Scope 3 information, such as supply chain, travel, waste, freight and purchased goods data
• Climate-related risks and opportunities that may affect enterprise value
• Scenario analysis, where required, and documented assumptions
• Internal controls over data collection and review
• Board and management oversight of climate-related risks

The accounting challenge is that much of this data does not live neatly in the general ledger. It is spread across invoices, fuel cards, fleet systems, electricity bills, supplier contracts, travel bookings, procurement platforms, leases and operational spreadsheets.

Why this is an accounting issue, not just a sustainability issue

Climate reporting is often discussed as an ESG matter, but the compliance burden will land heavily on finance teams. Accountants and bookkeepers are already the custodians of many relevant records: invoices, BAS workpapers, asset registers, fuel tax credit claims, payroll data, lease payments, insurance documents and supplier information.

For practices, this creates both risk and opportunity. Clients will need help determining whether they are in scope, building data capture processes, reconciling records and preparing evidence for directors, auditors and lenders.

For small businesses, the key issue is readiness. Even if a business is not required to lodge a climate report, it may need to respond quickly to customer or bank requests. Businesses that cannot produce credible records may be disadvantaged in tenders, finance applications or contract renewals.

July 2026 action checklist for accountants and bookkeepers

Because the first Group 2 reporting period may have already started, July is the month to move from awareness to implementation. Use the following checklist with affected clients and larger SME suppliers.

1. Confirm whether the client is in scope

Start with a threshold review. For each client group, confirm:

• Annual consolidated revenue
• Consolidated gross assets
• Average employee numbers
• Whether the entity is part of a larger corporate group
• Whether the entity has National Greenhouse and Energy Reporting obligations
• The first financial year commencing on or after 1 July 2026

Document the assessment, even where the client is not in scope. Borderline clients may cross thresholds due to acquisition, growth, restructure or group consolidation.

2. Map climate data to existing accounting records

Create a practical data map showing where each category of information will come from. For example:

• Electricity: energy invoices, embedded network statements, landlord recoveries
• Fuel: fuel cards, reimbursements, supplier invoices, vehicle logs
• Fleet: asset register, leases, odometer readings, insurance schedules
• Travel: corporate cards, expense claims, travel provider reports
• Freight: courier invoices, logistics contracts, delivery records
• Waste: waste contractor invoices, site reports
• Purchased goods: supplier spend reports and procurement categories

This is where accounting teams can add significant value. The earlier the data map is prepared, the less manual reconstruction will be required at reporting time.

3. Fix chart of accounts and coding issues now

If all vehicle expenses are posted to one account, or all utilities are coded inconsistently, climate reporting will be harder. July 2026 is the time to update coding rules so that relevant transactions are captured in a consistent way throughout the year.

Consider whether separate accounts, tracking categories or job codes are needed for:

• Electricity by site
• Gas by site
• Fuel by vehicle or business unit
• Air travel and accommodation
• Freight and logistics
• Waste and recycling
• Contractor and supplier categories

Bookkeepers should also review recurring bank rules and supplier coding to reduce misclassification from the start of the reporting period.

4. Capture supplier evidence, not just totals

Climate reporting is evidence-heavy. A total expense amount may not be enough. Clients may need invoices showing kilowatt hours, litres of fuel, delivery distances, waste volume, vehicle type or site details.

This means document management matters. Businesses should retain original invoices, supplier statements and usage reports in a way that can be retrieved quickly. If invoices are still being forwarded to individual inboxes or stored in ad hoc folders, that process should be tightened immediately.

Tools like Fedix can help accounting teams organise source records more efficiently. For example, MyLedger’s SmartDoc can support bulk receipt and document upload, while its bank-statement-first workflow helps accountants reconstruct transaction histories where clients have messy or incomplete records. It is not a climate reporting engine, but clean transaction data and searchable evidence are essential foundations for any compliance review.

5. Identify Scope 3 pressure points for SME clients

Many smaller businesses will feel the impact through Scope 3 supplier requests. Accountants should help SME clients prepare a simple response pack before customers ask for it.

A practical SME climate data pack might include:

• ABN, business structure and locations
• Annual electricity usage, where available
• Fuel usage or vehicle expense summaries
• Major freight, courier or logistics spend
• Travel expense summaries
• Waste contractor details
• Any environmental certifications or policies
• Contact person for supplier questionnaires

This does not mean every small business needs a full sustainability report. It does mean they should be able to provide basic, accurate operational data when requested.

Example: how the issue flows down to a small business

Consider a regional electrical contractor with 18 employees. It is not close to the Group 2 thresholds. However, one of its largest customers is a national construction group that begins mandatory reporting from 1 July 2026.

By September 2026, the construction group asks suppliers to provide information about diesel use, vehicle travel, purchased materials and site activity. The contractor’s bookkeeper has fuel invoices, vehicle expenses and supplier bills, but they are coded inconsistently and stored across email inboxes, a desktop folder and a cloud accounting file.

If the business waits until the customer deadline, the response becomes a stressful manual exercise. If the accountant acts in July, they can set up coding categories, collect fuel card statements, standardise document storage and produce a defensible summary when required.

Key risks accountants should discuss with clients now

For July 2026 client conversations, focus on practical risk rather than abstract sustainability language. The main risks are:

• Incomplete records: missing invoices, unavailable usage data or unsupported estimates
• Inconsistent coding: transactions posted to broad accounts with no site, vehicle or supplier detail
• Late supplier requests: clients receiving urgent questionnaires from major customers
• Audit pressure: increased scrutiny over assumptions, controls and evidence trails
• Director governance risk: boards needing confidence that disclosures are based on reliable information
• Finance and tender risk: lenders or customers preferring businesses with better data readiness

What to do before 31 July 2026

By the end of July, accounting practices should aim to complete a first-pass climate reporting triage for larger and high-exposure clients. A sensible 31 July target is:

• Identify clients that may meet Group 2 thresholds
• Flag SME clients that supply large corporates, government or infrastructure projects
• Review chart of accounts and tracking categories for fuel, utilities, fleet, freight and travel
• Set document retention rules for invoices and usage statements
• Assign internal responsibility for climate data requests
• Prepare a standard client email explaining the July 2026 changes
• Schedule deeper reviews for affected entities before September 2026

The firms that act now will be better placed to advise clients, support auditors and avoid a year-end scramble.

Final thoughts

Mandatory climate reporting is becoming a live compliance issue in July 2026. For Group 2 entities, the first reporting year is beginning. For SMEs, the flow-on effects are about to become more visible through supplier, lender and customer data requests.

The practical accounting response is straightforward: determine who is affected, capture the right records from day one, clean up coding, retain source documents and build a defensible evidence trail. Practices that treat climate data as part of the broader accounting record will be far better prepared than those that leave it to year-end.

If your firm is dealing with messy records, incomplete bank data or supplier documents scattered across multiple systems, platforms like Fedix can help bring the underlying accounting evidence into order. Learn more at fedix.ai.

Disclaimer: This article is for general informational purposes only and does not constitute professional financial or tax advice. Always consult a qualified accountant or tax professional for advice specific to your situation. Fedix.ai provides tools to assist accounting professionals but does not replace professional judgement.