AASB S2 Climate-Related Disclosures
AASB S2 is Australia’s mandatory climate-related financial disclosure standard, issued by the Australian Accounting Standards Board (AASB) in September 2024. Based on the international IFRS S2 standard, AASB S2 requires certain Australian entities to disclose information about climate-related risks and opportunities that could reasonably affect their cash flows, access to finance, or cost of capital.
AASB S2 introduces structured disclosure requirements across four core pillars: Governance, Strategy, Risk Management, and Metrics and Targets, including Scope 1, Scope 2, and Scope 3 greenhouse gas emissions.
Why AASB S2 Matters
AASB S2 represents the most significant change to corporate reporting in Australia in a generation. For the first time, climate-related disclosures will sit alongside financial statements, subject to the same level of regulatory scrutiny and assurance.
The standard aligns Australia with global best practice under the International Sustainability Standards Board (ISSB) framework. Organisations that prepare early will not only meet their legal obligations but also strengthen investor confidence, improve access to capital, and build long-term resilience against climate-related disruption.
Here is what that means for your organisation:
- It is mandatory, not voluntary. The Corporations Act 2001 determines which entities must comply. Non-compliance is not an option for in-scope organisations.
- Climate data is now treated like financial data. Auditors will apply the same rigour to your emissions figures and scenario analysis as they do to your balance sheet.
- Assurance is required from year one. Limited assurance over Scope 1 and Scope 2 emissions and governance disclosures begins immediately, with reasonable assurance over all climate disclosures required for financial years starting on or after 1 July 2030.
- Transition relief applies, but it is time-limited. Organisations have temporary relief from certain Scope 3 and scenario analysis disclosures, but they must still build the systems, data, and capability to meet full requirements.
The Four Pillars of AASB S2
AASB S2 organises its disclosure requirements around four interconnected pillars. Each pillar addresses a different dimension of how climate change affects an organisation, and together they provide a comprehensive picture for investors and stakeholders.
Governance
Organisations must disclose the governance processes, controls, and procedures used to monitor, manage, and oversee climate-related risks and opportunities. This includes the role of the board and management in climate decision-making, their climate competencies, and how climate considerations are integrated into strategy, risk oversight, and remuneration.
Strategy
Disclosures must address how climate-related risks and opportunities could affect an organisation’s business model, strategy, and financial position. This includes climate scenario analysis across different temperature pathways, assessment of transition plans, and the anticipated financial effects of climate risks.
Risk Management
Organisations must explain the processes used to identify, assess, prioritise, and monitor climate-related risks. This integrates with the entity’s overall risk management framework and requires disclosure of how climate risks are incorporated into existing enterprise risk processes.
Metrics & Targets
Disclosures must include Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, along with climate-related targets and progress against them. Organisations must also disclose the metrics used to measure and manage material climate risks and opportunities.
Who Must Comply
AASB S2 applies in three phases based on entity size, progressively bringing more Australian organisations into the reporting framework.
Group 1
From 1 January 2025
Entities meeting at least 2 of the following — $500M+ revenue, $1B+ gross assets, or 500+ employees.
Group 2
From 1 July 2026
Entities meeting at least 2 of — $200M+ revenue, $500M+ gross assets, or 250+ employees.
Group 3
From 1 July 2027
Entities meeting at least 2 of — $50M+ revenue, $25M+ gross assets, or 100+ employees.
Even if your organisation does not yet fall within the mandatory reporting thresholds, early preparation is strongly recommended. Supply chain pressures, investor expectations, and upcoming regulatory changes mean that voluntary adoption of AASB S2 frameworks can provide a competitive advantage and reduce future compliance costs.
How SESG Can Help
At SESG, we provide end-to-end advisory support for organisations preparing for AASB S2 compliance. Whether you are building your disclosure framework from scratch or refining an existing approach, our practitioners deliver practical, audit-ready outcomes grounded in decades of operational experience.
Our AASB S2 services include current state analysis, climate scenario analysis, GHG accounting and emissions measurement, governance advisory, compliance reporting, and independent assurance readiness.
We work alongside KubeNest for automated metrics and targets management, and ESG Coaching Academy for board and executive governance training, giving your organisation a complete AASB S2 solution.
How We Support AASB S2 Compliance
Gap Analysis & Readiness
Assess your current state against AASB S2 requirements and identify the gaps you need to close before your reporting deadline.
Climate Scenario Analysis
Model physical and transition risks across multiple climate pathways to inform strategy and meet AASB S2 disclosure requirements.
GHG Emissions Measurement
Establish accurate Scope 1, Scope 2, and Scope 3 emissions baselines with audit-ready data and methodology.
Governance & Training
Build board and executive climate literacy through ESG Coaching Academy, ensuring effective oversight and decision-making.
Automated Reporting with KubeNest
Streamline your AASB S2 metrics and targets reporting with KubeNest's purpose-built sustainability data management platform.