Set the ground rules
Scope defined. Surprises prevented. Entity, boundary, assumptions and reliefs: your basis of preparation. Read step 1.
ASRS AASB S2 reporting: From standard to 'sorted' in six steps
The CFO's operating guide to AASB S2. The full sequence from obligation to an assurance-ready disclosure, written out in full, free.
Work through it on this page, download the full guide, or start a free trial and run the six steps in Drova.
What is ASRS reporting?
ASRS reporting is the process of preparing climate-related financial disclosures under the Australian Sustainability Reporting Standards, chiefly AASB S2. The standard asks for disclosures across four areas: governance, strategy, risk management, and metrics and targets. Reporting is phased by entity size, and assurance applies early in the regime, so the real test is not what you write but whether the process behind it holds up. Check which reporting group you are in.
This guide is the operating sequence: six steps that take a finance team from reading the standard to an assurance-ready disclosure. No clause-by-clause recitals. Just the work, in order, with what assurance practitioners test at each step. Download the full guide (PDF) to keep, or read on.
The six steps, at a glance
The operating sequence, start to finish. Each step below carries the job, what assurance providers test, and the outcome you are left with.
Govern like it is being watched
Decisions visible. Oversight proven. Real accountability at board and management level, with the evidence to show it. Read step 2.
Connect climate to financials
Climate costed. Strategy sharpened. Material risks and opportunities, time horizons, and the financial effects. Read step 3.
Embed climate risk
Climate embedded. Not bolted on. Climate treated like every other financially material risk, inside your ERM framework. Read step 4.
Make your numbers defensible
Data owned. Evidence traced. Metrics with owners and controls; emissions traceable to source data. Read step 5.
Generate the report from the work
Process proven. Disclosure assembled. The disclosure assembled from records kept through the year, not rebuilt at year end. Read step 6.
Step 1
Step 1: What are the ground rules you set first?
Scope defined. Surprises prevented.
The job
Confirm your reporting entity, reporting period, organisational boundary for greenhouse gas emissions, and the key assumptions, judgements and reliefs that shape your disclosure. This is your basis of preparation.
Why assurance providers care
Everything downstream builds on this. If teams are working to different assumptions, metrics will not reconcile and the final disclosure becomes harder to defend. Auditors will look for a basis of preparation memorandum, confirmation of entity and group structure, and documentation of any significant estimates or omissions.
How Drova supports this
Your organisational profile and reporting context are established once and then flow consistently across risk assessment, compliance workflow, evidence collection and reporting. Set it once, use it everywhere.
The outcome
A clear, shared starting point. No ambiguity about what you are reporting on, or why.
“Finance teams understand numbers. Emissions data is challenging, but manageable. What's harder is governance, climate risk, strategy, and integration across the business.”
Jack Duffy
Head of Finance, Marubeni Itochu Tubulars Oceania
Step 2
Step 2: How do you prove climate governance is real?
Decisions visible. Oversight proven.
The job
Disclose who is accountable for climate-related risks and opportunities, how oversight is actually exercised, and how climate considerations are built into strategy, risk management, targets and decision-making, at both board and management levels.
Why assurance providers care
The year one question is straightforward: is climate risk oversight real and operating? Auditors want board minutes showing climate was discussed, charters with clear responsibilities, evidence of management escalation, and training records. What fails is governance that reads well in the disclosure but is invisible in practice, or oversight assigned to committees that never actually engage with climate decisions.
The assurance checkpoint
"Show me where this was discussed, decided, and challenged."
How Drova supports this
Governance becomes a live workflow. Owners are assigned to specific requirements, tasks are tracked, and evidence such as charters, board papers, minutes, approvals and training records is linked directly to disclosure clauses. When the auditor asks, the answer is already mapped.
The outcome
Clear ownership between finance, risk and sustainability. Standing forums where climate-related financial decisions are visibly discussed. CFO sign-off points that exist in the system, not just in theory.
“Climate creates financial risks and opportunities that affect cash flow, cost of capital, and strategy. That's why S2 sits under IFRS. It's fundamentally financial.”
Rachel Riley
Co-Founder and CFO, Drova
Step 3
Step 3: How do climate risks connect to your financials?
Climate costed. Strategy sharpened.
The job
This is the most substantial disclosure area. Describe which climate risks and opportunities are financially material, define your time horizons, explain how they affect your business model and value chain, show how strategy responds (including any transition plan), and address current and anticipated financial effects.
Why assurance providers care
This is where most disclosures weaken. Organisations identify the issue but do not explain the response, the trade-offs, or the financial consequences. Year one does not require precision; auditors test for plausibility and linkage. Strategy language with no financial consequences fails. Scenario analysis that describes pathways but does not translate into business impact also fails.
The assurance checkpoint
"We do not expect precision. We test for plausibility and linkage."
How Drova supports this
Material issues link to strategy actions, mitigation responses, owners and evidence. Time horizons and value chain impacts are standardised and applied consistently, so the disclosure explains not just what the issue is, but what management is doing about it and how it flows through to financial thinking.
The outcome
A risk and opportunity register with clear time horizons and value chain mapping. Strategy responses linked to identified risks. Financial impacts documented with assumptions and limitations made explicit, even where modelling is still maturing.
Six steps on paper. One system in practice.
Drova's end-to-end AASB S2 solution
Materiality, climate risk, controls and the full ASRS reporting workflow, in one place.
Step 4
Step 4: How does climate fit your risk framework?
Climate embedded. Not bolted on.
The job
Disclose your processes for identifying, assessing, prioritising and monitoring climate-related risks and opportunities, and show how they are integrated into your overall enterprise risk management framework.
Why assurance providers care
The question is whether climate is treated like every other financially material risk, or whether it lives in a parallel sustainability silo. Auditors want ERM integration, documented financial materiality judgements, and risk outcomes that inform governance and strategy. What causes friction: climate risk handled outside core risk processes, or judgements reconstructed late with no contemporaneous evidence.
The assurance checkpoint
"Was climate treated like other financially material risks? If not, why not?"
How Drova supports this
Climate-related risks link into your existing risk workflow, map to scoring and prioritisation logic, and carry evidence of assessment, monitoring and governance review. The risk process looks and behaves like the rest of enterprise risk management, because it is.
The outcome
Climate risks assessed through your risk framework. Materiality judgements documented and approved at the time of assessment. Risk outcomes visibly informing strategy and disclosure.
“Completeness is the number one audit principle. Auditors will ask: how do you know you captured everything?”
Misha Cajic
Co-Founder and Co-CEO, Avarni
Step 5
Step 5: How do you make the numbers defensible?
Data owned. Evidence traced.
The job
Disclose the metrics you use to monitor climate risks and opportunities: GHG emissions (Scope 1, 2 and 3), transition and physical risk indicators, capital deployment, internal carbon pricing and remuneration. Set targets and report against them.
Why assurance providers care
Metrics carry the most technical complexity. The challenge is not producing numbers, it is showing they are controlled, traceable and meaningful. Auditors want named owners, clear controls and a documented basis of preparation. Evidence should come from normal business activity, not be assembled at year end.
The assurance checkpoint
"Can this process scale and be repeated next year as Scope 3 expands and assurance expectations increase?"
How Drova supports this
Metrics and targets link back to the risks, opportunities, strategy actions and governance processes they support. For emissions, Drova partners with Avarni, whose approach starts with your chart of accounts and general ledger, applies categorisation and emissions factors, and reconciles back to source records across Scope 1, 2 and 3, creating an emissions foundation that is complete, defensible and repeatable.
The outcome
Metrics with owners and controls. Emissions traceable to source data. Targets grounded in clear base years, methodologies and progress tracking. A repeatable approach that does not restart from zero next year.
One step to go. Take the guide with you.
The full operating guide, in a format you can share.
All six steps with the assurance checkpoints, ready to hand to your board, your audit committee or your assurance provider.
Step 6
Step 6: How do you assemble the disclosure?
Process proven. Disclosure assembled.
The job
Confirm where your climate disclosures sit within the general purpose financial report, handle cross-referencing, timing alignment with financial statements, comparatives or transition reliefs, and your statement of compliance.
Why assurance providers care
The strongest sign of a mature process is that the disclosure does not need to be built from scratch. It is assembled from governance, controls, tasks, evidence and metrics already maintained through the year.
How Drova supports this
The disclosure report is the output of the workflow. It is assembled from underlying records and reviewed for consistency and completeness, rather than reconstructed at year end.
The outcome
A disclosure that reads as the record of a process, because it is one. Cross-references that hold, comparatives handled, and a compliance statement you can stand behind.
What does year one actually have to get right?
Year one is a test of process, not precision.
If one message cuts through the complexity of AASB S2, it is this: the standard asks whether you built a process that is clear, evidenced and governed. Assurance practitioners test whether governance, strategy, risk and metrics tell the same story, backed by evidence, not whether every number is perfect.
Repeatability matters just as much. A strong year one process should be designed to improve, not restart. One of the most important assurance questions is whether the process can scale into year two as Scope 3 expands and expectations increase. Whether you run the six steps in-house, with a partner, or as a hybrid, build them somewhere the structure, evidence and institutional memory survive the reporting cycle. Choosing between consultants, technology or both is its own decision, with a decision tree to match.
Same obligation. Very different operating cost.
How you deliver the six steps decides what they cost.
Built manually, the process works once and restarts next year. Run with consultants alone, the knowledge leaves when the engagement ends. Run on purpose-built software, the system keeps the structure, the evidence and the institutional memory, so year two is an iteration, not a rebuild.
ASRS reporting questions, answered
Does year one need perfect numbers?
No. Assurance practitioners are clear that year one is tested for plausibility and linkage, not precision. What fails is strategy language with no financial consequences, governance that exists only on paper, and judgements reconstructed at year end. Document assumptions and limitations honestly and keep evidence as the work happens.
What do assurance providers test in an ASRS reporting process?
One core question: do governance, strategy, risk management and metrics tell the same story, backed by evidence? Practically that means board minutes and charters for governance, materiality judgements documented at the time they were made, metrics with named owners and controls, and a disclosure assembled from records kept through the year.
How is this guide different from the AASB S2 disclosures checklist?
The checklist lists every required disclosure, clause by clause, with the audit evidence each one needs. This guide is the operating sequence: the order to do the work in, who owns each step, and what assurance practitioners test. Use the checklist to know what to disclose and the guide to run the process that produces it.
Can the same process carry into year two?
That is the point of running it as a system. If the structure, evidence and task history live in a platform rather than in spreadsheets or a consultant’s files, year two starts from what year one captured: the same framework, refreshed evidence, and a process that improves instead of restarting.
