What does AASB S2 compliance cost?

There are three separate costs and conflating them is why quotes look incomparable: preparation of the report, assurance as a separate engagement with a separate provider, and your own internal time. Preparation cost moves on the number of entities and sites, whether Scope 3 is in scope, and how retrievable your activity data already is. Assurance cost moves mostly on the quality of your working papers.

Should we use a consultant, software, or do it in-house?

They solve different parts of the problem and most first-year reporters need more than one. Software produces numbers, consultants produce judgements and documents, and in-house produces control while carrying the risk. The deciding question is which option leaves you holding a complete assurance file at the end.

What is the materiality threshold for climate disclosures?

There is no prescribed number. Under AASB S2, information is material if omitting or misstating it could reasonably be expected to influence users' decisions. Separately, your assurance practitioner sets a quantitative materiality for testing, and the two are related but different.

Glossary›AASB S2 disclosure requirements / AASB S2 mechanics›Reasonable and supportable information without undue cost or effort

Glossary term

Cluster C · C18

Tier 1 · differentiator

Reasonable and supportable information without undue cost or effort

Definition

This is the effort standard AASB S2 measures a disclosure against. The entity must use all information about past events, current conditions and forecasts of future conditions that is available to it at the reporting date without undue cost or effort. It need not undertake an exhaustive search. What counts as undue depends on the entity’s own circumstances.

AASB S2

· Appendix D paragraphs B8 to B10, applied by paragraphs 11 and 18 ·

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

This phrase is the most consequential sentence fragment in AASB S2 for a mid-market business, because it is the standard’s proportionality mechanism. It appears wherever the standard asks the entity to look outward: identifying risks and opportunities (paragraph 11), preparing anticipated financial effects (paragraph 18(a)), selecting scenario analysis inputs and analytical choices (Appendix B paragraphs B8, B10, B11 and B14), and selecting greenhouse gas measurement inputs.

Note the appendix. The definition of the effort standard lives at Appendix D paragraphs B8 to B10, which are drawn from AASB S1. Appendix B paragraphs B8 to B10 are a different set of paragraphs about determining a scenario analysis approach. Citing “B10” without naming the appendix is ambiguous and, in a document a reader may rely on, wrong.

Three things the primary text says that preparers consistently do not expect.

No exhaustive search is required. Appendix D paragraph B10 says so directly. The entity need not undertake an exhaustive search to identify climate-related risks and opportunities. The assessment of what constitutes undue cost or effort requires a balanced consideration of the cost and effort to the entity against the benefit of the resulting information to primary users.

Information you already use is automatically available. Appendix D paragraph B9 states that information used by the entity in preparing its financial statements, operating its business model, setting its strategy and managing its risks and opportunities is considered to be available without undue cost or effort. That is a deeming provision and it sets a floor. An entity cannot claim undue cost or effort over data sitting in its own budget model, insurance schedule, capital plan, asset register or board papers. In practice this is where most of a proportionate first-year disclosure comes from.

The threshold moves. Appendix D paragraph B10 says the assessment can change over time as circumstances change, and Appendix B paragraphs B7 and B16 make the same point about scenario analysis capability: an entity that repeats the exercise develops skills, and its approach is expected to strengthen. A position that was reasonable in year one is not automatically reasonable in year four, and an entity that has grown, acquired, or hired a sustainability team has moved its own threshold.

The permitted sources are broad. Appendix D paragraph B8 requires the information to cover both entity-specific factors and general external conditions. Paragraph B9 names risk management processes, industry and peer group experience, and external ratings, reports and statistics as possible sources. Appendix B paragraph B9 adds that reasonable and supportable information includes qualitative as well as quantitative information, whether externally obtained or internally developed. Nothing in the standard requires purchased data.

For a CFO the operational translation is a short one. The question is never “have we found everything”. It is “can we show that we looked at what we already had, plus what was freely available, and that we made a considered judgement about where to stop”. That is a documentable position. “We could not afford consultants” is not.

What the assurer does with it

The effort standard is where an assurer’s proportionality judgement actually lands, so it is worth understanding how they test it. They do not test whether the entity found every risk, because that is unknowable. They test whether the entity applied a defensible process to a defensible information set, and they anchor that against the paragraph B9 deeming provision.

The procedure is usually this. They list the information the entity already generates (budget and forecast models, the insurance schedule and renewal correspondence, the capital plan, the asset and lease registers, board and committee papers, the enterprise risk register, major customer and supplier correspondence) and they ask whether each was considered. Anything on that list that was not considered is a finding, because the standard deems it available. They then ask what external information was used and why the entity stopped where it did.

They accept a documented information-sources list, a record of the judgement about scope with a reason, and consistency between what the entity claims it could not obtain and what it demonstrably holds. They reject an undue-cost-or-effort assertion over information the entity uses to run the business, an assertion made with no record of what was considered, a scope decision made by an adviser with no evidence management adopted it, and an unchanged position in a later year where the entity’s circumstances have plainly changed. The question that exposes a weak position is simply whether the board discussed anything during the year as a financial risk with a climate driver that did not make it into the disclosure, because if it did, the information was self-evidently available.

Commonly confused with

Materiality, which is a different test applied at a different point. Reasonable and supportable information without undue cost or effort governs what the entity must look at. Materiality governs what it must disclose from what it found. An entity can properly consider a risk and properly conclude it is immaterial; it cannot properly decline to look at information it already holds. Also confused with the impracticable relief, which is a far higher bar and applies to specific requirements rather than to the general effort standard.

Timing and relief

Not a relief and not time-limited. It is the permanent measuring stick for effort, available in every reporting period. Its practical generosity is greatest in the first year and narrows as the entity’s own capability grows, because the standard explicitly contemplates the threshold moving with circumstances.