What happens if we have to restate last year's emissions?

You restate the comparative and disclose what changed, why, and the effect. Restatement is expected as data improves and is not treated as a failure. What the assurance practitioner tests is whether you have a written policy setting out when you restate, and whether you applied it consistently.

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.

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.

Glossary›AASB S2 disclosure requirements / AASB S2 mechanics›Climate-related targets (interim and net zero)

Glossary term

Cluster C · C26

Tier 1 · differentiator

Climate-related targets (interim and net zero)

Definition

A climate-related target is a quantified objective the entity has set for a climate-related metric, with a stated timeframe and base period. AASB S2 requires disclosure of the target, how it was set, how progress is monitored, performance against it, and whether it relies on carbon credits. A net target must be disclosed alongside its associated gross target.

AASB S2

· paragraphs 33 to 36, with 36(c) gross and net and 36(e) carbon credits ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Timing and relief
Sources
Related terms
Related questions

Cluster

C · AASB S2 disclosure requirements / AASB S2 mechanics, 25 terms

In practice

Targets are where a sustainability report most often outruns its evidence, and AASB S2 is written to stop that.

Paragraph 33 sets the anatomy of every disclosed target: the metric used, the objective, the part of the entity it applies to, the period it applies over, the base period it is measured from, any milestones or interim targets, and how it relates to any international climate agreement. A target announced as “net zero by 2050” with none of those elements is not a compliant disclosure; it is a slogan with a date.

Paragraph 34 asks how the target was set: the approach taken, whether it was validated by a third party, the process for reviewing it, and the metrics used to monitor progress. Paragraph 35 asks for performance against each target and an analysis of trends.

Paragraph 36 is the greenhouse gas specific one and carries two provisions worth knowing by name:

36(c): gross alongside net. If the target is a net target, the associated gross target must also be disclosed. The net figure must not obscure the gross one. In plain terms, an entity cannot present a target achieved by offsetting without also showing what it intends to do to its own emissions.

36(e): carbon credits. The planned use of carbon credits to meet the target must be disclosed, with enough detail to show the extent of reliance, including the type of credit and any third-party verification scheme. Credits already purchased are disclosed where doing so helps a reader understand the target.

The interim target point is the one CFOs should press internally. A 2050 target commits nobody currently employed. Paragraph 33 requires disclosure of milestones and interim targets where they exist, and their absence from a long-dated commitment is visible to a reader.

What the assurer does with it

Targets sit in metrics and targets, so they are inside the assurance scope from the second reporting year when limited assurance covers all disclosures, and earlier where a target is embedded in a strategy disclosure.

The assurer tests four things: that the target as disclosed matches the target as approved, with a board or committee minute behind it; that the base period figure is the same figure previously reported, or that any change is disclosed as a restatement; that progress is calculated on the same basis as the base year, with any boundary or methodology change adjusted for; and that the carbon credit disclosure matches what the entity actually plans.

They accept a target with a documented approval, a stable base year, a written recalculation policy and a consistent progress calculation. They reject progress measured against a base year that has been quietly recalculated, a net target with no gross target disclosed, a reliance on credits described in general terms with no type or scheme named, and a target the board never formally approved. The recurring finding is a progress percentage that improves because the base year moved, not because emissions fell.

Commonly confused with

A transition plan, which is the strategy for achieving the targets and carries its own disclosure requirement. A target is the destination; the plan is the route. Also confused with a science-based target as certified by an external initiative, which is one way of setting a target and is disclosed under paragraph 34 as third-party validation, not a requirement of AASB S2.

Timing and relief

No first-year relief from the target disclosures has been identified, but the requirement only bites on targets the entity has actually set. An entity with no climate target discloses that it has none; AASB S2 does not require a target to exist.