Are you ready for AASB S2 Mandatory Climate-Related Financial Disclosure?

From January 2025, large businesses in Australia will have to share detailed reports on how the climate impacts their operations. This requirement comes from a proposed law by the Department of Treasury.

To help these businesses report accurately, the Australian Accounting Standards Board (AASB) has published a set of guidelines called the Australian Sustainability Reporting Standards (ASRS).

Ready to get started?

Australian Sustainability Reporting Standards (S1 & S2)

To date, there are two ASRS standards that have been issued:

  1. AASB S1 (voluntary standard): General Requirements for Disclosure of Sustainability-related Financial Information

  2. AASB S2 (mandatory standard): Climate-related Disclosures

These standards are largely aligned with the International Sustainability Standards Board (ISSB) standards IFRS S1 and S2.

What Needs to Be Reported?

01

GOVERNANCE

  • This includes:

    • The individuals (such as board members) or committees charged with overseeing CROs.

    • How climate-related responsibilities are incorporated into the broader governance framework.

    • The means by and frequency with which the individuals or committees are informed about CROs.

    • How the setting of climate-related targets are overseen and monitored.

02

STRATEGY

  • This includes:

    • Business Impacts: Impacts of climate change on the entity’s business model, value chain, financial position and cash flow.

    • Time Horizons: Short, medium and long-term time horizons must be considered, with an explanation of how they align with strategic decision-making timeframes.

    • Scenario Analysis: The Corporations Act 2001 mandates the use of at least two scenarios: one where global temperature increase is limited to 1.5°C and one where it well exceeds 2.5°C.

03

RISK MANAGEMENT

  • This includes:

    • Processes and policies for assessing climate risks, including key inputs, use of scenario analysis, risk evaluation methods, and any changes made during the period.

    • How climate-related risks are identified and whether they are integrated into the overall risk management framework or treated separately.

04

  • This includes:

    • GHG emissions - Scope 1, 2 and 3

    • Assets at risk from both physical and transition climate impacts

    • Assets or business activities aligned with climate-related opportunities

    • Capital, financing, or investments directed toward addressing CROs.

    • Internal carbon prices

    • Proportion of executive remuneration linked to climate-related factors.

    • Details of climate-related targets set by the entity and the metrics used to track progress.

METRICS & TARGETS

Who Needs to Report?

Early preparation is key. Speak to our AASB S2 experts today.

A Readiness Assessment is a good starting point and may include:

  • Clarifying disclosure requirements relevant to your organisation

  • Running a materiality discovery workshop to identify existing information and key contacts

  • Delivering tailored training to educate and engage internal stakeholders

  • Conducting a gap analysis of existing material against AASB S2 requirements

  • Presenting findings and outlining recommended next steps for disclosure readiness

Ready to get started?

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We license and apply the IFRS® Sustainability Disclosure Standards, SASB® Standards, and SICS in our work.