
Australia’s corporate climate reporting landscape has undergone a significant transformation. Central to this shift is the introduction of AASB S2 Climate-related Disclosures, the first mandatory standard under the country’s new ASRS standards framework. Effective from financial years beginning on or after 1 January 2025, this rule marks a new era of transparency and accountability. Here’s what companies must know to stay compliant and position themselves for success.
What Are the ASRS Standards and How Does AASB S2 Fit In?
The Australian Sustainability Reporting Standards (ASRS standards) consist of two components: AASB S2, which is mandatory, and AASB S1, a voluntary general sustainability reporting standard. AASB S2 is based on the global IFRS S2 Climate-related Disclosures, with adjustments to suit Australia’s regulatory and corporate environment.
Importantly, AASB S2 also incorporates key aspects of IFRS S1 through its Appendix D, which sets out general reporting principles such as timing, materiality, location of disclosures, and dealing with uncertainties. This makes AASB S2 a comprehensive and standalone standard for climate-related financial reporting.
Who Must Report and When?
The requirement to publish sustainability reports containing climate-related financial disclosures is phased in across three groups of companies:
- Group 1: Entities with reporting periods beginning on or after 1 January 2025.
- Group 2: Entities reporting from 1 July 2026.
- Group 3: Entities reporting from 1 July 2027.
These obligations apply to large listed entities, significant proprietary companies, NGER reporters, and superannuation or managed funds that exceed certain thresholds. This phased approach ensures businesses have time to build capacity and systems to comply effectively.
Core Disclosure Requirements Under AASB S2
AASB S2 requires entities to disclose climate-related information that is useful for investors and stakeholders in assessing financial performance and resilience. The disclosures must cover four main areas:
- Governance: Explain which individuals or governance bodies oversee climate-related issues and their responsibilities, expertise, and oversight practices.
- Strategy: Describe climate-related risks and opportunities and how they may affect cash flows, access to finance, or cost of capital in the short, medium, and long term.
- Risk Management: Outline processes used to identify, assess, and manage climate-related risks, and how these integrate into broader risk management systems.
- Metrics and Targets: Report quantitative data, including Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, alongside climate scenario analysis and targets for reducing impacts.
Companies must also apply general reporting principles such as clear disaggregation, comparability across periods, and transparent explanation of uncertainties.
Assurance and Accountability
The new framework introduces assurance requirements on a phased basis. Initially, companies will be required to obtain limited assurance over selected elements, such as governance and Scope 1 and 2 emissions. Over time, this will transition to reasonable assurance, likely by 2030, covering the full scope of disclosures.
Directors also face new responsibilities. Between 2025 and 2027, directors must declare that they have taken reasonable steps to ensure compliance. From 2028 onwards, directors will be required to explicitly confirm that disclosures meet both the Corporations Act and AASB S2 requirements.
While the Australian Securities and Investments Commission (ASIC) has stated it will take a pragmatic approach during the transition period, entities are expected to begin preparing immediately.
Strategic Benefits Beyond Compliance
Though AASB S2 is a regulatory requirement, compliance offers broader advantages. Meeting the standard demonstrates strong governance and transparency, enhancing investor confidence. It also supports access to sustainable finance, improves resilience to climate risks, and positions companies competitively in a market that increasingly values sustainability performance.
Organisations that move early are more likely to attract sustainability-focused investors, reduce reputational risks, and integrate climate resilience into their business strategy. Beyond reporting, the standard can act as a catalyst for embedding sustainability at the core of decision-making.
Key Steps for Companies
To prepare effectively, companies should:
- Determine their reporting group and timeline for compliance.
- Conduct a gap analysis to compare current reporting with AASB S2 requirements.
- Strengthen governance and board oversight of climate-related issues.
- Develop robust systems for emissions measurement and data collection.
- Prepare for assurance requirements by establishing internal controls and documentation.
- Train staff and engage external advisors to support implementation.
These steps will help organisations move from compliance to value creation under the new reporting framework.
Conclusion
Australia’s introduction of AASB S2 as the first mandatory climate-related reporting standard under the ASRS standards represents a pivotal moment in corporate disclosure. Companies must understand and act on the requirements for governance, strategy, risk management, and metrics, while preparing for assurance and director accountability. By proactively aligning with ASRS standards, businesses will not only comply with regulations but also strengthen resilience, attract investment, and secure a competitive advantage in a rapidly changing economy.