Mandatory climate-related financial reporting is being phased in under the Corporations Act 2001 across three groups of entities. The first reporting period for which an entity must apply AASB S2 is:

• Group 1: first annual reporting periods beginning on or after 1 January 2025
• Group 2: first annual reporting periods beginning on or after 1 July 2026
• Group 3: first annual reporting periods beginning on or after 1 July 2027

Reporting is mandatory for entities that prepare a financial report under Chapter 2M of the Corporations Act and meet the criteria in section 292A: meeting at least two of three size criteria (revenue, assets, employees), being a National Greenhouse and Energy Reporting (NGER) reporter, or being an asset owner with assets above specified thresholds. The per-group dollar thresholds sit in the legislation; ASIC’s sustainability reporting guidance (RG 280) has the detail.

Entities can also apply AASB S2 voluntarily. A voluntary reporter must comply with all of the requirements in order to state compliance with the Standard.

Not sure which group you are in? See whether AASB S2 applies to you.

AASB S2 clauses: Appendix D 11-19, Aus20.1, 21-24, 60, 62-64, 66-68, 70, 72-73, 74-75, 77-78, 83-86; Appendix C AusC1.1, C3-C5

Basis of preparation sets the "ground rules" for the climate-related disclosures: who and what is included, the reporting period, key judgements and estimates, and any omissions or limitations, so users can understand how the disclosures were prepared and how to interpret them, including connectivity to the financial statements where relevant.

Required disclosures

• Statement of compliance
• Reporting entity and boundary
• Reporting period
• Use of estimates and judgements
• Explanation of omissions (if any)

Disclosure text

• These climate-related financial disclosures have been prepared in accordance with Australian Sustainability Reporting Standards, including AASB S2 Climate-related Financial Disclosures.
• Reporting period:  
• Reporting entity / group structure included:  
• Organisational boundary for greenhouse gas emissions (control / equity share):  
• Significant estimates and judgements used in preparing the disclosures:  
• Explanation of omitted disclosures (if applicable):  

Audit evidence typically reviewed

• Basis of preparation memorandum
• Confirmation of reporting entity and related financial statements
• Group structure and consolidation documentation
• Management judgement papers
• Disclosure completeness checklist

AASB S2 clauses: 5-7 (including 6(a)(i)-(v), 6(b)(i)-(ii))

The governance disclosures explain who is accountable for climate-related risks and opportunities, how oversight is exercised, and how climate considerations are built into strategy, risk management, targets and decision-making. The aim is to give users confidence that climate-related matters are governed with the same discipline as other enterprise-critical issues.

2.1 Governance body oversight

Clause references: 6(a)(i)-(v)

Disclosure text

• The Board/Committee oversees climate-related risks and opportunities.
• The Committee meets   and reviews  
• Climate-related matters reviewed during the reporting period included  
• The governance body considered climate-related risks and opportunities when overseeing strategy, major transactions, risk management and related policies, including targets and transition plans during  

Audit evidence typically reviewed

• Board and committee charters and delegated authorities
• Board and committee minutes and packs evidencing oversight, decisions and challenge
• Papers demonstrating climate-related oversight

2.2 Management's role

Clause references: 6(b)(i)-(ii), 7

Disclosure text

• Management responsibility for identifying and managing climate-related risks and opportunities sits with  
• Management responsibilities include  
• Climate-related matters are escalated to the Board  
• Controls in place to support management oversight of climate-related information (how controls are integrated into the internal control environment):  

Audit evidence typically reviewed

• Role descriptions; responsibility matrices
• Governance frameworks and forums
• Internal reporting packs
• Control descriptions, evidence of operation, and sign-offs supporting the climate disclosure process

2.3 Skills and capability

Clause references: 6(a)(ii)

Disclosure text

• Climate-related skills and capability are supported through  
• Training undertaken during the reporting period included  

Audit evidence typically reviewed

• Skills and competency evidence (for example a capability matrix, training, external advisers) tied to oversight expectation
• Training records
• Capability assessments

AASB S2 clauses: 8-23 (including 9(a)-(c), 10(a)-(d), 11, 12, 13, 14(a)-(v), 15-21, 22(a)-(c), 23; Aus23.1)

Strategy disclosures explain which climate-related risks and opportunities are financially material, how they affect the business model and value chain, how strategy (including any transition plan) responds, and the current and anticipated financial effects and resilience (including scenario analysis where applicable).

3.1 Financially material climate-related risks and opportunities

Clause references: 9(a), 10(a)-(b), 11(a)-(c)

Disclosure requirement: describe climate-related risks and opportunities that could reasonably be expected to affect the entity's financial performance, financial position or cash flows.

Table: financially material climate-related risks and opportunities

Audit evidence typically reviewed

• Risk registers
• Financial materiality assessment outputs
• Management risk and finance papers

3.2 Time horizons

Clause references: 10(c)-(d)

Disclosure text

• Short-term time horizon is defined as:  
• Medium-term time horizon is defined as:  
• Long-term time horizon is defined as:  

Audit evidence typically reviewed

• Internal definitions used consistently across strategy and risk frameworks

3.3 Impact on business model and value chain

Clause references: 12(a)-(b), 13

Disclosure text

• Climate-related risks and opportunities affect the entity's business model and value chain through  
• Where climate-related risks and opportunities are concentrated in the business model and value chain:  
• Key dependencies and exposures include  

Audit evidence typically reviewed

• Value chain mapping
• Strategy and operating model documentation
• Key dependencies

3.4 Strategy and decision-making (including transition plan)

Clause references: 14(a)-(v) (including whether a transition plan exists and key assumptions/dependencies)

Disclosure text

• How the entity has responded to climate-related risks and opportunities in strategy and decision-making:  
• Progress against any previously disclosed plans:  
• Trade-offs and synergies considered:  
• How strategy is resourced (including capex, people, and other resources):  
• Whether a transition plan exists: Yes / No
• If yes: summary of plan, assumptions, dependencies, and progress:  

Audit evidence typically reviewed

• Strategy papers
• Investment approvals
• Transition plan artefacts (if applicable)

3.5 Financial effects

Clause references: 15-21

Disclosure text

• Current financial effects identified in the reporting period (financial position / performance / cash flows):  
• Anticipated financial effects (how they are expected to change over time, including time horizons):  
• How the entity expects effects to impact financial planning (including how it has factored them into financial position, performance and cash flows):  
• Where quantitative information is not disclosed, the reasons are   and the entity plans to  

Audit evidence typically reviewed

• Financial forecasts and budgeting models
• Impairment assessments
• Provisions and assumptions papers
• Capital allocation decisions that reflect disclosed effects

3.6 Climate resilience (scenario analysis)

Clause references: 22(a)-(c), 23; Aus23.1

Disclosure text

• The entity has conducted climate-related scenario analysis to assess the resilience of its strategy.
• Approach to scenario analysis (including inputs, assumptions, limitations, and uncertainty):  
• Scenarios used:   (for example, 1.5°C, 2°C, other)
• Key assumptions applied:  
• Limitations and uncertainty associated with the analysis:  
• Scenario analysis results informed  

Audit evidence typically reviewed

• Scenario analysis report
• Assumptions documentation
• Management review and approval papers

3.7 Optional: impact materiality

This section is optional and not required for compliance with AASB S2. It is included for organisations that apply double materiality or are preparing for broader leading practice sustainability reporting.

Impact materiality summary

AASB S2 clauses: 24-26, Aus26.1

Risk management disclosures explain the processes and policies used to identify, assess, prioritise and monitor climate-related risks and opportunities, and whether and how those processes are integrated into and inform the entity's overall risk management process.

4.1 Identification and assessment

Clause references: 25(a)(i)-(vi)

Disclosure text

• Climate-related risks and opportunities are identified using  
• Assessment criteria consider likelihood, magnitude and potential financial impact.
• Inputs and parameters used (for example data sources, coverage of operations and value chain)
• Whether and how scenario analysis informs risk identification
• How the entity prioritises climate-related risks relative to other risks
• How the entity monitors climate-related risks
• Whether and how processes changed vs the prior period:   (or "No material changes")

Audit evidence typically reviewed

• Risk assessment methodology
• Risk matrix
• Risk register extract (climate risks and opportunities), workshop outputs, scenario analysis inputs and outputs (if used), and evidence of monitoring cadence (for example risk reporting to Board, KRI dashboards, committee packs)

4.2 Integration into enterprise risk management

Clause references: 25(b)-(c)

Disclosure text

• Climate-related risks are integrated into enterprise risk management through  
• Material climate-related risks are reviewed  
• The extent to which, and how, processes for climate-related risks and opportunities are integrated into and inform the entity's overall risk management process:  

Audit evidence typically reviewed

• Risk committee packs
• Enterprise risk management framework
• Risk committee reporting

AASB S2 clauses: 27-32 (including 28, 29(a)-(g), 30-32)

Metrics disclosures explain what the entity measures to monitor climate-related risks and opportunities, how those metrics link back to strategy and risk management, and how the metrics are measured (sources, methods, and reasonableness constraints) so the numbers are decision-useful and assurance-ready.

5.1 Metrics used to measure and monitor

Clause references: 28

Disclosure text

• Metrics used to measure and monitor climate-related risks and opportunities:  
• How the metrics relate to strategy and risk management:  

Audit evidence typically reviewed

• Metric definitions
• Governance approvals
• Evidence metrics are used in decision-making

5.2 Cross-industry metrics (categories)

Clause references: 29(a)-(g)

5.2.1 Greenhouse gas emissions (Scopes 1, 2 and 3)

Clause references: 29(a)(i)-(vi)

GHG emissions (gross)

Rows: Scope 1 (tCO₂-e) · Scope 2, location-based · Scope 2, market-based · Scope 3 (categories disclosed)

Required accompanying disclosures (inputs)

• Measurement approach required: confirm GHG Protocol Corporate Standard (2004) is used unless transition relief applies:  
• Scope 2: location-based emissions disclosed, and information about contractual instruments related to Scope 2 (if applicable):  
• Disaggregation between (a) consolidated accounting group and (b) associates, joint ventures, unconsolidated subsidiaries (if applicable):  
• For Scope 3: which categories included; explanation of what is included in category 15 (investments) (if applicable):  
• If applicable (asset management / commercial banking / insurance): financed emissions disaggregation required:  

Audit evidence typically reviewed

• Metric definitions
• Emissions inventory outputs
• Source data (energy, procurement, travel, suppliers)
• Quality assurance and validation documentation
• Governance approvals

5.2.2 Transition risks

Clause references: 29(b)

Table: transition risk exposure and management

Audit evidence typically reviewed

• Transition risk assessment outputs
• Underlying datasets
• Link to strategy and risk register

5.2.3 Physical risks

Clause references: 29(c)(i)-(iii)

Table: physical risk exposure

Audit evidence typically reviewed

• Asset registers
• Geo and hazard mapping
• Methodology and assumptions

5.2.4 Climate-related opportunities

Clause references: 29(d)

Table: opportunity alignment and performance indicators

Audit evidence typically reviewed

• Business cases
• Revenue and capex linkages
• Evidence supporting opportunity claims

5.2.5 Capital deployment

Clause references: 29(e)

Disclosure text

• Capital deployed toward climate-related risks and opportunities:  

Audit evidence typically reviewed

• Capex approvals
• Opex classifications
• Program tracking

5.2.6 Internal carbon prices

Clause references: 29(f)

Disclosure text

• Whether an internal carbon price is used and, if so, how:  

Audit evidence typically reviewed

• Carbon price policy; financial model inputs; governance approvals

5.2.7 Remuneration

Clause references: 29(g)

Disclosure text

• Whether and how climate-related considerations are factored into remuneration:  

Audit evidence typically reviewed

• Remuneration policy
• Scorecards
• Board remuneration committee papers

5.3 Sources, measurement approach, and reasonableness

Clause references: 30-32

Disclosure text

• Whether all reasonable and supportable information available at the reporting date has been used (without undue cost or effort):  
• Explanation of any judgement applied re "undue cost or effort":  
• If industry-based metrics guidance is used (including that referenced in B64-B65):  

Audit evidence typically reviewed

• Methodology statements
• Data lineage
• Management sign-offs on reasonableness and constraints

AASB S2 clauses: 33-36, B71 (guidance on carbon credits disclosure scope)

Targets disclosures explain what the entity is trying to achieve, how progress is measured and governed, and, where targets are "net", how much relies on carbon credits and the credibility of those credits.

6.1 Climate-related targets

Clause references: 33-35

Disclosure text

• Targets are absolute or intensity-based:  
• Use of offsets or credits:  
• Gross vs net target (for any GHG emissions target):  

Audit evidence typically reviewed

• Target approval documentation
• Progress tracking reports

6.2 Net greenhouse gas emissions targets (if applicable)

Clause references: 36(e) and related planned use of carbon credits (including the scope of what is required)

Disclosure text

• If the entity has set a net greenhouse gas emissions target:
• Planned use of carbon credits to achieve the target (type, extent, assumptions as applicable):  

Audit evidence typically reviewed

• Carbon credit strategy
• Procurement plans and contracts
• Assumptions about eligibility and retirement (as applicable)

AASB S2 clauses: Appendix D 60, 62-64, 66-70, 72-73; Appendix C AusC1.1, C3-C5; Appendix D B33-B37, B45-B47

Reporting and compliance disclosures confirm where the climate disclosures sit within the General Purpose Financial Report ("GPFR"), how they can be found (including cross-references), how timing aligns to the financial statements (including subsequent events), and whether transition relief or exemptions have been used.

7.1 Location and identification

Disclosure text

• Disclosures are included in general purpose financial reports: Yes / No
• If placed alongside other required disclosures (for example regulatory), confirm clearly identifiable and not obscured:  

7.2 Cross-references (if used)

Disclosure text

• List each cross-referenced disclosure and precise location (report + section/page):  

7.3 Timing, period length changes, and subsequent events

Disclosure text

• Timing aligns with financial statements:  
• If reporting period differs from 12 months or changed: disclosures per 66(a)-(c):  
• Post-period updates and disclosures (67-68):  

7.4 Comparatives and first-year transition

Disclosure text

• Comparatives included (unless transition relief applied):  
• If first year: note "no comparative information required" relief (C3):  
• If first year relief used for emissions method and/or Scope 3 (C4):  

7.5 Statement of compliance and exemptions

Disclosure text

• Statement of compliance included (only if fully compliant):  
• If law/regulation exemption used: identify type of information and source of restriction:  
• If commercially sensitive opportunity exemption used: disclose use + reassessment approach:  

Audit evidence typically reviewed

• Final disclosure pack with cross-reference index and traceability to evidence
• Controls and sign-offs supporting completeness and consistency with financial statements
• GPFR mapping pack (location of each required disclosure; cross-reference index final check)
• Subsequent events memo / representation (period-end to sign-off)
• Legal review / advice supporting any exemptions

AASB S2
Australian Sustainability Reporting Standard covering climate-related financial disclosures. Read the full AASB S2 explainer.

Climate-related risks
Physical and transition risks arising from climate change that could reasonably be expected to affect an entity's financial performance, financial position or cash flows.

Climate-related opportunities
Opportunities arising from climate-related changes that could reasonably be expected to affect an entity's financial outcomes.

Financial materiality
Information is financially material if omitting, misstating or obscuring it could reasonably be expected to influence decisions of primary users of general purpose financial reports.

Scenario analysis
A process for evaluating the potential effects of different climate-related futures on an entity's strategy and financial performance.

Scope 1, 2 and 3 emissions
Direct emissions (Scope 1), indirect energy emissions (Scope 2), and other indirect value-chain emissions (Scope 3), as defined by the GHG Protocol.

Transition plan
An entity's plan to adapt its business model, strategy and operations in response to climate-related transition risks.