AASB S2 Climate-Related Disclosures
What is the AASB S2?
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.
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.
- The scope goes well beyond emissions reporting. Governance uplift, climate scenario analysis (using at least a 1.5°C and a 2.5°C+ pathway), risk and opportunity assessments, transition plans, and financial quantification are all required. For many organisations, these are entirely new workstreams.
- Deadlines are staggered but imminent. Group 1 entities are already reporting. Group 2 begins for financial years from 1 July 2026. Group 3 follows from 1 July 2027.
Who Needs to Report Under AASB S2?
Reporting obligations are determined by the Corporations Act 2001 and are phased across three groups:
| Group | Mandatory Reporting Begins | Typical Entities |
|---|---|---|
| Group 1 | Financial years beginning on or after 1 January 2025 | Large entities meeting the highest thresholds, including large NGER reporters |
| Group 2 | Financial years beginning on or after 1 July 2026 | Mid-size entities meeting the second-tier thresholds |
| Group 3 | Financial years beginning on or after 1 July 2027 | Smaller entities and certain government-related organisations |
Group 3 entities that do not have material climate-related financial risks and opportunities may be exempt from preparing a full sustainability report, but must still disclose a statement to that effect and explain why.
How to prepare for AASB S2
Preparing for AASB S2 requires a shift from manual tracking to a structured, audit-ready approach. Climate disclosures demand a level of data depth, traceability, and mathematical rigour that spreadsheets and legacy processes were never designed to deliver.
Understand how AASB S2 applies to your organisation
Determine which reporting group your entity falls into and what your first mandatory reporting period will be. Map the standard's requirements against your current reporting structure, from national operations down to specific business units and contractual levels.
Conduct a gap analysis against current disclosures
Review your existing climate-related data, processes, and governance practices against the four pillars of AASB S2: Governance, Strategy, Risk Management, and Metrics and Targets. Identify where you have gaps, particularly in climate scenario analysis and Scope 3 emissions, which are new requirements for most organisations.
Establish a digital single source of truth
Move beyond spreadsheets. Consolidate data from across business units into a centralised platform that automates data collection, standardises calculation methodologies, and creates a repeatable, scalable reporting process. This is critical for meeting assurance requirements.
Build board and management awareness
Educate board members and senior leadership on the complexities of climate-related disclosures, including how Scope 1, 2, and 3 emissions interact with financial disclosures, risk management, and strategic planning. Governance is one of the first areas subject to assurance.
Create a reporting readiness timeline
Map out key milestones against your mandatory reporting date. Allow time for data collection infrastructure, governance frameworks, scenario analysis, and at least one dry run before your first formal disclosure.
How KubeNest Helps You Report Under AASB S2
KubeNest is a purpose-built sustainability data management platform designed for Australian organisations preparing for AASB S2 compliance. Built by KubeNest 7 supported by SESG, a specialist sustainability consulting firm that delivers AASB S2 engagements daily, KubeNest bridges the gap between consulting advice and operational data management.
Automated climate data collection
Collect and consolidate Scope 1, Scope 2, and Scope 3 emissions data automatically across your entire organisation. Reduce manual overhead and eliminate the spreadsheet errors that create assurance risk.
Audit-ready data trails
Every data point in KubeNest is traceable, time-stamped, and structured for limited and reasonable assurance verification. Your auditor gets clean, organised data from day one.
Multi-level data hierarchies
Drill up and down across national, state, site, and contractual levels. Standardise tracking and reporting across business units, subsidiaries, and supply chain partners.
Framework alignment
KubeNest is aligned to AASB S2, GHG Protocol, GRESB, and GRI frameworks. Pre-built reporting structures mean you are not starting from scratch.
Beyond emissions
KubeNest manages more than carbon. Energy, water, waste, WHS, habitat and biodiversity, and people data all sit in one platform, giving you a single source of truth for all sustainability metrics.
Future-proofed for full assurance
As assurance requirements ramp up toward reasonable assurance over all climate disclosures by July 2030, KubeNest ensures your data infrastructure is ready, not just for year one, but for every year that follows.
FAQs
What are the Australian Sustainability Reporting Standards (ASRS)?
The ASRS are a set of standards issued by the AASB in September 2024. They consist of two standards: AASB S1 (General Requirements for Disclosure of Sustainability-related Financial Information), which is voluntary, and AASB S2 (Climate-related Disclosures), which is mandatory for certain entities under the Corporations Act 2001.
What is the difference between AASB S1 and AASB S2?
AASB S1 is a voluntary standard covering sustainability-related financial disclosures broadly. AASB S2 is the mandatory standard, focused specifically on climate-related risks and opportunities. An entity applying AASB S2 is not required to also apply AASB S1, although it may refer to AASB S1 for guidance.
What are Scope 1, Scope 2, and Scope 3 emissions?
Scope 1 emissions are direct emissions from sources owned or controlled by your organisation (e.g. company vehicles, on-site fuel combustion).
Scope 2 emissions are indirect emissions from purchased electricity, heat, or steam.
Scope 3 emissions are all other indirect emissions across your value chain, including supply chain, business travel, waste disposal, and use of sold products.
Is Scope 3 reporting required under AASB S2?
Yes, however there is a transition relief. Entities may elect not to disclose Scope 3 emissions in their first sustainability report. From the second reporting period onwards, Scope 3 disclosure is required.
Will my climate disclosures need to be audited?
Yes. Limited assurance is required from year one over specific disclosures including Scope 1 and Scope 2 emissions and governance. The assurance requirements increase progressively, with reasonable assurance over all climate disclosures required for financial years starting on or after 1 July 2030.
Is there any liability protection during the transition?
The legislation includes a transitional limited immunity period for three years from 1 January 2025. During this period, actions related to disclosures of Scope 3 emissions, scenario analysis, and transition plans attract limited liability protections.
How does AASB S2 relate to NGER reporting?
AASB S2 is a separate disclosure requirement from NGER (National Greenhouse and Energy Reporting). However, entities that are NGER reporters and meet certain emissions thresholds may be classified into an earlier reporting group. The two frameworks can complement each other, and a platform like KubeNest can manage both reporting obligations in one place.