ESG Reporting: Why Councils Should Start Preparing Now 

Environmental, social, and governance reporting, known as ESG, is quickly becoming a key focus for local governments. 

While not all local councils fall under the new federal ESG reporting rules, those that meet certain size and reporting criteria may be required to comply. 

And for other local councils not yet required to report, there’s growing pressure from governments, communities, and funding bodies to start moving in that direction.

Under these new national standards, local governments would be expected to report on how they manage issues like emissions, long-term environmental planning, and governance transparency. These reports won’t just be for internal review; they’ll be public, formal, and subject to scrutiny.

And for many councils, that presents a new challenge.

Preparing ESG reports takes time, clear processes, and the ability to gather and organise data across multiple teams. Some councils are already on their way, while others are just getting started.

In this article, we explore why ESG reporting is now a high priority for local government, what the new rules actually require, and how councils can prepare without adding unnecessary burden to their teams.

Understanding the new ESG reporting standards

From 2025, large companies will be required to disclose how they manage climate-related risks, track emissions, and make decisions around governance and long-term planning. 

The rules are part of a phased rollout tied to organisation size. Larger entities report first. Smaller ones will follow.

Here’s what the timeline looks like:

• Group 1: Entities with over 500 employees or $1 billion in assets start reporting from January 2025.

• Group 2: Mid-sized entities report from July 2026.

• Group 3: Smaller entities start from July 2027.

These deadlines apply to entities that are required to prepare financial reports under Chapter 2M of the Corporations Act, which includes some public sector bodies.

While most local councils are not currently subject to these rules, councils that meet the reporting thresholds and fall under the Act may be required to comply.

Depending on their size and legal status, a council could fall into Group 2 or 3 and be expected to report under AASB S2 within that timeline.

For other councils, ESG reporting is still optional. But many are choosing to start early to meet growing expectations around funding, procurement, and public accountability.

AASB S1 & AASB S2

The new standards, known as AASB S1 and S2, set out what councils will need to report. 

AASB S2 focuses specifically on climate-related risks and is mandatory for private and public entities that are required to prepare financial reports under the Corporations Act.

AASB S1, on the other hand, covers broader ESG topics like social equity, biodiversity, or workforce inclusion and is currently voluntary, but still important for councils looking to build a full picture of their sustainability performance.

Councils that choose to align with ESG reporting will usually focus on four main areas:

• Governance: Who’s responsible for ESG at your council? How are decisions made and monitored?

• Strategy: How are climate risks and sustainability goals built into your plans and policies?

• Risk Management: What steps are in place to assess and respond to issues like extreme weather, emissions targets, or supply chain risks?

• Metrics and Targets: What data is being tracked, like emissions, energy use or waste, and how is progress being measured?

The scope is wide, and the level of detail expected is significant.

Many councils, especially those with fewer resources, are still working out how to manage this. For some, data lives in separate systems. Others aren’t yet collecting the right metrics. And for councils that haven’t needed to report in the past, building a structured approach from scratch can feel overwhelming.

While some councils may soon be required to report under the new standards, others aren’t far behind - the pressure is already here. ESG considerations are now appearing in grant applications, procurement frameworks, and audit processes. 

That’s why starting early matters. Councils that begin building ESG reporting into their operations now will avoid last-minute pressure later. They’ll also be better prepared to meet funding requirements, respond to audits, and demonstrate strong governance when it counts.

The bottom line: the sooner councils start, the smoother the road ahead.

The ESG challenge for local government

For many councils, meeting new ESG reporting standards is easier said than done. While the intent is clear, greater transparency, better planning, and stronger governance, the path to get there is often murky.

One of the biggest challenges is capacity. Not every council has in-house sustainability expertise or a dedicated team focused on ESG. In smaller or regional councils, reporting tasks are often added to existing roles, stretching already limited resources even further.

Then there’s the issue of data. ESG reporting requires information from across the organisation, finance, infrastructure, property, energy, and more. But in many councils, that data lives in different systems or isn’t being tracked in a structured way. Bringing it all together can be a manual, time-consuming process.

For councils just starting out, the question is often: where to begin?

Without clear reporting tools or a consistent framework, it’s easy to lose momentum. Teams may spend weeks trying to interpret what needs to be reported, how to format it, and whether the data they have is good enough. All while trying to keep up with everything else on their plate.

And as deadlines draw closer, the administrative burden grows. Without proper systems in place, compliance becomes another layer of pressure, adding to internal workloads and increasing the risk of delays or errors.

Turning ESG compliance into capability

Despite these hurdles, ESG reporting doesn’t need to be a drain on time or resources. With the right structure in place, it can become a valuable part of how councils plan, track, and communicate their progress.

The value of ESG reporting

At its core, ESG reporting is about showing how councils are managing risks and delivering on long-term responsibilities. It offers a way to align internal goals with community expectations and national standards, and to do so in a way that’s clear and accountable.

Councils that embed ESG into their regular operations often see greater benefits:

• It enhances transparency by clearly communicating how environmental, social, and governance risks are being handled, internally and externally.

• It builds trust with stakeholders and the public by showing evidence-based progress.

• It streamlines compliance, reducing the time and effort spent manually preparing reports or chasing data across teams.

• It supports long-term risk management by encouraging councils to identify, measure, and respond to climate and governance risks early.

• It improves funding readiness, helping councils demonstrate alignment with state and national sustainability goals. In Western Australia, for instance, the state government has introduced several initiatives that reflect a broader shift toward ESG-linked funding. 

This includes a $15 million Carbon Innovation Grants Program to support low-emission projects, as well as a Sustainability Bond Framework managed by the WA Treasury Corporation. While not all of these are aimed at local councils directly, they highlight the direction funding bodies are moving in.

Councils that can show clear progress on ESG reporting are more likely to meet the criteria when these kinds of opportunities arise.

·        It brings internal teams together by creating shared frameworks for tracking and reporting ESG efforts.

·        It reduces the administrative burden by including reporting into day-to-day workflows instead of treating it as a separate, one-off task.

And when it comes to putting that into practice, technology has an important role to play, especially for councils managing ESG reporting for the first time.

How a platform like CouncilFirst supports ESG reporting

For councils navigating ESG reporting for the first time, a platform like CouncilFirst reduces the workload involved in gathering, managing, and presenting data, whilst providing support through each stage of the reporting process.

Key features include:

• Customisable reporting templates that help teams build ESG reports without having to create everything from scratch.

• Templates that can be adapted to align with AASB S1 and S2, simplifying regulatory alignment.

• Audit trails, version control, and evidence tracking, providing a clear, defensible record of what was reported and when.

• Integration with existing data sources, including finance, asset management, and energy systems, so information is pulled together automatically.

• Live dashboards, offering a centralised view of ESG performance across departments.

• Scalability for future requirements, so the platform grows with the council’s reporting needs over time.

• And automated workflows, which reduce manual data entry and help teams stay on track.

With these elements in place, ESG reporting becomes more manageable and repeatable, fitting into existing operations instead of competing with them.

How councils can get started

ESG reporting doesn’t need to be perfect on day one. For councils new to this space, the key is to start small, start structured, and build gradually.

The Australian Sustainability Reporting Standards (ASRS) recommend a phased, strategic approach, one that focuses on building internal understanding, improving data quality, and setting realistic goals over time.

Here’s how councils can take that first step.

Start with a materiality assessment

Before deciding what to report, it’s important to understand what matters most. A materiality assessment helps councils identify which sustainability issues are most relevant to their operations and communities.

This means looking at climate risks, social and governance priorities, and community expectations, and focusing reporting efforts where they will have the most local impact.

Assign roles across departments

Sustainability reporting isn’t a solo task, as it requires input from multiple teams, finance, infrastructure, procurement, HR, and beyond. Assigning roles early creates accountability, avoids duplication, and helps establish a shared understanding of what’s needed.

Even if the responsibilities are shared across roles or departments, having clear points of contact can keep things moving.

Build a phased roadmap

Councils don’t have to report on everything at once. Developing a phased plan, starting with what’s achievable now and expanding over time, can make the process more manageable.

This might include:

• Year 1: Scope 1 and 2 emissions, basic governance, and strategy disclosures

• Year 2: Expanding to risk management and metrics

• Year 3: Introducing Scope 3 emissions and more detailed performance targets

Breaking it into stages helps teams build confidence while gradually improving data quality and reporting depth.

Use your ERP system as the foundation

As mentioned earlier, technology can play a critical role in simplifying ESG reporting. By using an ERP platform like CouncilFirst, councils can bring together data from across departments, align reporting with AASB S1 and S2, and reduce the manual work of preparing reports.

Instead of managing ESG through spreadsheets and email threads, councils can use their ERP to centralise information, track performance, and make the reporting process repeatable and scalable.

Final thoughts

The councils that make progress on ESG now won’t just be better prepared. They'll be in a stronger position to lead, secure funding, and build lasting trust with their communities.

Technology won’t do the work for you, but with the right platform in place, ESG reporting becomes something councils can manage with clarity and confidence.

Take the next step in ESG reporting

See how CouncilFirst can support your council’s ESG journey by simplifying compliance, connecting your data, and helping you stay ahead of what's coming. Get in touch to learn more.