Mandatory Climate Reporting in Australia:
The Complete AASB S2 and IFRS S2 Compliance Guide

AASB S2 is the Australian Accounting Standards Board’s mandatory climate disclosure standard, aligned with IFRS S2. It applies to large for-profit entities registered under the Corporations Act 2001 that meet at least two of three size thresholds across revenue, gross assets, and employee headcount. Reporting begins for Group 1 entities (revenue above $500M) from 1 January 2025, with Groups 2 and 3 following in 2026 and 2027 respectively.

IFRS S2 is the international climate disclosure standard issued by the ISSB. AASB S2 is Australia’s adoption of IFRS S2, with limited modifications to reflect Australian regulatory context, including the phased assurance requirements and the specific group classification system used to determine in-scope entities. The substantive disclosure requirements — governance, strategy, risk management, and metrics and targets — are identical.

Scope 3 emissions disclosure is required from the second year of reporting for Group 1 and Group 2 entities. A one-year transition relief applies in the first reporting year. However, ASIC’s guidance makes clear that entities are expected to use the transition period to establish Scope 3 methodology and begin supply chain data engagement rather than deferring all preparation activity.

AASB S2 mandates phased assurance requirements. Group 1 entities must obtain limited assurance over Scope 1 and Scope 2 emissions disclosures from their second reporting year, with reasonable assurance required from year four. Groups 2 and 3 follow the same schedule offset from their respective reporting start dates. Assurance providers must be registered auditors or approved assurance practitioners.

Non-compliance with AASB S2 is a breach of obligations under the Corporations Act 2001. ASIC has indicated it will take a risk-based approach to enforcement, with a focus on material misstatement, greenwashing, and failure to lodge required disclosures. Directors may face personal liability for materially misleading or incomplete climate-related financial disclosures.

First-year scenario analysis should focus on demonstrating a structured, documented methodology rather than delivering a fully quantified model. Entities should identify the scenario frameworks they are using (such as NGFS or IEA scenarios), document the time horizons applied, describe the physical and transition risks assessed, and explain the implications for strategy. Qualitative scenario analysis is acceptable for Group 2 and 3 entities in early reporting years, and ASIC has indicated that it expects improvement in methodology over time rather than perfection in year one.

Yes. The mandatory climate reporting regime applies to all large for-profit entities registered under the Corporations Act, including unlisted public companies and large proprietary companies that meet the group thresholds. Registered foreign companies operating in Australia are also captured. Unlisted entities meeting Group 1 or Group 2 thresholds should treat their reporting obligations as equivalent to those of listed entities.

NGER and AASB S2 have overlapping but distinct purposes. NGER requires large greenhouse gas emitters to report scope 1 and scope 2 emissions data to the Clean Energy Regulator for regulatory purposes. AASB S2 requires climate-related financial disclosures for users of financial reports, including investors and lenders. Many entities will use their NGER data as a starting point for AASB S2 emissions disclosures, but AASB S2 requires broader disclosure including Scope 3 emissions, scenario analysis, and governance information not covered by NGER.