Glossary›Measurement and governance / Governance, board and directors›Board oversight of climate-related risks
Glossary term
Cluster E · E2
Tier 1
Board oversight of climate-related risks
Definition
Board oversight is the arrangement by which a board, a committee or a designated individual monitors climate-related risks and opportunities and the entity’s response to them. AASB S2 requires it to be disclosed in specified detail, covering mandates, skills, information flow, integration into strategy and transaction decisions, and oversight of targets.
On this page
In practice
The governance pillar is the shortest section of AASB S2 and the one most entities treat as narrative. It is not narrative, it is a list of assertions about documents, and it is reviewed in year one alongside Scope 1 and Scope 2 under ASSA 5010 paragraph 10(a)(i).
The five sub-requirements in paragraph 6(a) each carry an evidence implication, and the fastest way for a company secretary to prepare is to work the list backwards from the evidence.
Sub-requirement
What paragraph 6(a) asks
The evidence it implies
Mandates and terms of reference
6(a)(i) asks how climate responsibilities are reflected in terms of reference, mandates, role descriptions and related policies.
The board charter, the committee charter, the delegations register, and any position description that carries climate responsibility.
Skills and competencies
6(a)(ii) asks how the body determines whether appropriate skills and competencies are available or will be developed.
A board skills matrix with a climate line in it, and a record of any training or briefing delivered. This is the item most frequently absent entirely, and it is the easiest to remedy.
Information flow
6(a)(iii) asks how and how often the body is informed.
The meeting calendar, the standing agenda item, and the board papers themselves. Note the standard asks how often, which means the disclosure states a frequency and the minutes must support it.
Integration into decisions
6(a)(iv) asks how climate is taken into account when overseeing strategy, decisions on major transactions and risk management processes, including whether trade-offs were considered.
A board paper on a real decision (an acquisition, a capital investment, a site closure) that shows climate was a factor. This is the hardest item to evidence and the most valuable. The trade-off limb was added deliberately and it invites disclosure of tension, not just alignment.
Targets and remuneration
6(a)(v) asks how the body oversees target setting and monitors progress, including whether and how related performance metrics are included in remuneration policies.
Minutes approving targets, papers reporting progress, and the remuneration framework.
An entity with no climate targets still answers this item; the answer is that there are no targets, which is a complete response and is not itself a deficiency.
Where private companies differ from listed ones. The regime applies the same disclosure requirement to a private group with $50 million in revenue as to an ASX 100 company, and there is no scaling in paragraph 6. What differs is the honest answer. A private board that considers climate twice a year, at the audit and risk committee, with the CFO presenting, and has no dedicated climate expertise but has briefed itself, discloses exactly that. It is a compliant disclosure. What is not compliant is describing a governance structure that resembles a listed company’s and does not exist.
What the assurer does with it
The assurer reads the disclosure and then goes looking for each assertion in a document. This is one of the few parts of the engagement where the procedure is almost entirely reading, and it is correspondingly fast and correspondingly unforgiving.
They accept assertions supported by charters, matrices, calendars, papers and minutes that predate or span the reporting period. They reject an assertion with no supporting document, a document created after year end to support a period assertion, a disclosed frequency the minutes contradict, and a description of oversight that is generic enough to apply to any entity, which signals a template rather than a description.
Where the disclosure claims climate informed a major transaction, expect the request for that transaction’s board paper. That single request separates real integration from aspirational language faster than anything else in the engagement.
Commonly confused with
The climate governance framework, which is the documented structure itself. Board oversight is the specific AASB S2 disclosure requirement about how the board exercises its role; the framework is the underlying architecture the disclosure describes. Also confused with risk management disclosures under AASB S2, which cover the processes for identifying and managing climate risk rather than the board’s oversight of them.
Sources
1
2
ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001
AUASB
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Company secretary and registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster E, Measurement and governance / Governance, board and directors
10 terms on what the board must be able to evidence, what personal exposure directors carry, and how the audit and risk committee engages with the assurer. Governance disclosures sit inside the year-one assurance scope.
Related terms
Where the oversight is usually exercised and evidenced in practice
The documented architecture the paragraph 6(a) disclosure describes
The paragraph 6(b) half of the same disclosure, covering the roles below the board
Related questions
What governance evidence does the assurance provider look for?
−
Evidence that the governance you described actually happened: board and committee minutes and papers showing climate was considered, terms of reference allocating oversight, the delegation to management, and dated records of the decisions you disclose. Governance disclosures are assured from year one, so the paper trail matters immediately.
What will our audit and risk committee ask us?
+
The same questions they ask about the financial report, applied to information the committee has never seen before. Expect them on capture and scope, where each number comes from and what controls sit over it, the significant judgements and materiality, who your assurance provider is and whether they are independent of the preparer, and what liability protection applies and until when. It works as a self-test: anything you cannot answer today is a work item.
What does the board have to sign?
+
The directors’ declaration in the sustainability report. For financial years commencing between 1 January 2025 and 31 December 2027, directors declare they have taken reasonable steps to ensure the report complies with the Corporations Act. From financial years commencing 1 January 2028, they declare their opinion that it does comply.
Other terms in this cluster
Board oversight of climate-related risks