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Definition

AASB S2 Climate-related Disclosures Definition

AASB S2 Climate-related Disclosures sets the climate information that qualifying Australian entities must include in their statutory sustainability report, covering governance, strategy, risk management, metrics, targets, and greenhouse gas emissions.

What is AASB S2 Climate-related Disclosures?

AASB S2 is the Australian Accounting Standards Board's climate disclosure standard. It requires information about climate-related risks and opportunities that could affect cash flows, access to finance, or cost of capital over the short, medium, or long term. The Corporations Act decides which entities must report; the Australian climate reporting guide sets out the cohorts, thresholds, and dates. AASB S1 remains voluntary.

Why does AASB S2 matter to you?

Australia phased mandatory reporting in for financial years beginning on or after 1 January 2025 for Group 1, 1 July 2026 for Group 2, and 1 July 2027 for Group 3. An in-scope entity must put AASB S2 information into its annual sustainability report and support the report's assurance and directors' sign-off.

Your finance, risk, operations, and sustainability teams may need to connect board records, risk registers, scenario analysis, financial assumptions, energy and fuel records, emission calculations, targets, and source documents. A supplier outside direct scope may still receive a specific emissions or climate-risk question from an in-scope customer.

How does AASB S2 work?

Start with the reporting period and the AASB S2 version that applies. For periods beginning before 1 January 2027, the September 2024 requirements apply unless the entity early-adopts AASB S2025-1 and discloses that fact. The amendments are mandatory for periods beginning on or after 1 January 2027. Then map the four core areas: paragraph 6 covers governance, paragraphs 9 to 22 cover strategy, paragraph 25 covers risk management, and paragraphs 29 and 33 to 36 cover metrics and targets.

For each disclosure, record the reporting boundary, period, data owner, method, assumptions, source file, reviewer, and approval. Paragraph 29 includes gross Scope 1, Scope 2, and Scope 3 emissions in metric tonnes of CO2e. Appendix C permits first-year relief from Scope 3 disclosure, but the report should identify and support every relief used.

What mistakes should you avoid?

  • Testing the thresholds but forgetting that the entity must also have a Chapter 2M financial-reporting duty.
  • Using a voluntary AASB S1 report as a substitute for the climate disclosures required by AASB S2.
  • Reporting emissions without the boundary, unit, factor, method, assumptions, and source records needed for review.
  • Leaving the directors' declaration until the end without a resolution, date, signatory, and supporting review record.

Is AASB S2 mandatory for every Australian company?

No. Section 292A of the Corporations Act requires an entity to have an annual financial-reporting duty under Chapter 2M and also meet a corporate-size test, have a reporting duty under the National Greenhouse and Energy Reporting (NGER) Act, or meet the asset-owner test. Confirm the entity, consolidated group, financial-year start date, and applicable threshold before treating AASB S2 as a direct legal duty.

What is an Australian sustainability report?

An Australian sustainability report is the statutory report within the annual reporting package for a covered entity. Under Corporations Act section 296A(1), it consists of climate statements, notes to those statements, any other required statements and notes, and the directors' declaration. Section 296C requires its substantive provisions to comply with the applicable sustainability standards.

What must the Sustainability Report Directors Declaration say?

The Sustainability Report Directors Declaration is the sign-off required by section 296A(1)(e). For financial years beginning from 1 January 2025 through 31 December 2027, section 1707C changes it to an opinion that the entity took reasonable steps to ensure compliance. The declaration must follow a directors' resolution, state its date, and be signed by a director. After that transition, section 296A(6) applies in its ordinary form.

Worked example

Domain adjustment: AASB S2 is jurisdiction-bound, so this example keeps the assigned construction materials producer but moves it from Canada to Australia.

Suppose the Australian producer has already confirmed that it is a Group 2 reporter for the financial year from 1 July 2026 to 30 June 2027. Its finance lead creates one AASB S2 register covering paragraph 6 governance, paragraphs 9 to 22 strategy, paragraph 25 risk management, paragraph 29 metrics, and paragraphs 33 to 36 targets.

For strategy, the team records how heat, flood, energy-price, and lower-carbon product assumptions affect its plants, freight, planned capital spending, and financial forecasts. It documents the two climate futures used for scenario analysis, the source of each assumption, the owner, the reviewer, and any information still missing.

The statutory report contains climate statements, their notes, and the directors' declaration. Before sign-off, the team closes the open evidence items and gives the directors the requirement register and review record. For this transitional year, the declaration follows a directors' resolution, states its date, is signed by a director, and says that the entity took reasonable steps to ensure compliance.

Where you'll meet it

AASB S2 governance oversight and management controlsAASB S2 paragraphs 5-7AASB S2 strategy, financial effects, and climate resilienceAASB S2 paragraph 9(a)-(e) and paragraphs 10-22AASB S2 climate risk and opportunity management processesAASB S2 paragraph 25(a)-(c)AASB S2 greenhouse gas metrics and climate targetsAASB S2 paragraph 29(a) and paragraphs 33-36Australian sustainability report contents and directors' declarationCorporations Act 2001 sections 296A(1), 296A(6)-(7), 296C, and 1707C

Related terms

Sustainability Reporting

Sustainability reporting is the process of publishing evidence-backed information about a company's environmental, social, and governance impacts, risks, opportunities, policies, targets, and performance for a defined period and business boundary.

Materiality

Materiality is the test a company uses to decide which sustainability topics matter enough to manage or report because they could affect its finances, reflect significant impacts on people or the environment, or both.

Scope 2 Emissions

Scope 2 emissions are the indirect greenhouse gas emissions from generating the electricity, steam, heat, and cooling your company buys and uses.

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Carbon Accounting

Carbon accounting is the process of defining a company’s greenhouse gas inventory, collecting activity data, applying emission factors, and reporting Scope 1, Scope 2, and Scope 3 emissions on a consistent basis.

Sources

Last verified 2026-08-19

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AASB S2 Climate-related Disclosures Definition | Keslio