AASB S2 Mandatory Climate-Related Financial Disclosure
Getting ready for Mandatory Climate-Related Financial Disclosure
The mandatory Climate-Related Financial Disclosure was passed into law by the Australian Parliament in September 2024. Starting from 1 January 2025, large Australian entities and NGER reporters will have to disclose their climate risks and opportunities through annual sustainability reports.
The mandatory climate reporting standards will be implemented in a three-phase approach, starting with entities meeting the Group 1 threshold.
Understand Your AASB S2 Requirements and Gain Clarity
Australian Sustainability Reporting Standards (S1 & S2)
To help companies report accurately, the Australian Accounting Standards Board (AASB) has published the Australian Sustainability Reporting Standards AASB S1 and AASB S2:
AASB S1: General Requirements for Disclosure of Sustainability-related Financial Information – voluntary standard
AASB S2: Climate-related Disclosures – mandatory standard
These standards are largely aligned with the International Sustainability Standards Board (ISSB) standards IFRS S1 and S2.
What needs to be reported?
Companies will need to disclose:
Governance: the governance processes, controls and procedures the entity uses to monitor and manage climate-related risks and opportunities
Strategy: the approach the entity uses to identify and manage climate-related risks and opportunities,
Risk management: the processes the entity uses to identify, assess, prioritise and monitor climate-related risks (physical and transition risks) and opportunities, and
Metrics and targets: the entity’s performance in relation to climate-related risks and opportunities, including progress towards any targets the entity has set
Importantly, the sustainability report needs to align to financial reporting and undergo assurance. Users of these reports need to be able to understand how an entity measures, monitors and manages its significant climate-related risks and opportunities.
Getting Started
We recommend that companies be proactive and start preparing early for these disclosures.
This may include understanding when the reporting requirements may apply to you, conducting a gap analysis, building internal capability, bringing finance and sustainability functions together and creating a roadmap to continuously improve reporting.
A Readiness Assessment would be one place to start, and could involve one or more of the following:
Rationalising disclosure requirements for your organisation
A climate-related material discovery workshop to identify what your organisation already has in place and who in your organisation may be able to provide existing material
Educating and empowering your internal stakeholders with training sessions relevant to your organisation’s specific disclosure obligations
A review of your organisation’s existing related material and its applicability to the disclosure requirements, i.e. a gap analysis of existing material
Presentation of the results of this review to key internal stakeholders, including a brief discussion of any next steps
How Greenbase Can Help
Greenbase offers comprehensive support across all aspects of AASB S2, including:
Readiness Assessment or Gap Analysis
Planning for Disclosure / Roadmap
GHG Emissions Estimates — Scope 1, 2 and 3 Carbon Accounting
Scope 3 Materiality Assessments
Regular Tracking (monthly/quarterly) of GHG Emissions Estimates
Climate Change Risk Assessments
Scenario Analysis
Identification of Risks and Opportunities
Carbon Management — including transition planning, GHG emission projections and scenario modelling
Documentation Support — e.g. Basis of Preparation
Customised Education
Audit Support