SustainNext Climate Reporting

AASB S2 is Australia's new mandatory climate disclosure standard that requires in-scope organisations to report how climate change affects their business. Think of it as telling the story of how global warming, extreme weather, and the transition to clean energy could impact your company and the impact of these on current and future performance, changes in financial position and cash flows.

If your organisation is required to prepare financial statements under Chapter 2M of the Corporations Act 2001, you may be in scope for AASB S2.

Mandatory reporting will be introduced in phases. Group 1 entities must comply for financial years ending on or after 1 January 2025. Group 2 entities follow for financial years beginning on or after 1 July 2026, and Group 3 entities for financial years beginning on or after 1 July 2027.

This staged rollout reflects the gradual expansion of mandatory climate disclosures across Australia.

You are likely in scope if your organisation meets at least two of thefollowing criteria.

Group 1 entities typically have revenue of $500M or more, assets of $1B or more, and 500 or more employees. You are also in scope if you are an NGER reporter with emissions exceeding 50,000 tCO₂-e, regardless of size.

Group 2 entities generally have revenue of $200M or more, assets of $500M or more, and 250 or more employees. This group also includes all other NGER reporters and asset owners with $5B or more in assets under management, regardless of revenue or employee thresholds.

Group 3 entities typically have revenue of $50M or more, assets of $25M or more, and 100 or more employees.

It means explaining to investors, lenders, credit providers, stakeholders, and communities how climate change could affect your cash flow, cost of capital and access to funding over the short, medium and long term. For example, if you're a retailer, you might need to explain how extreme weather could disrupt your supply chain or how changing consumer preferences for sustainable products could affect sales.

Start by understanding your business’ value chain and the climate risks and opportunities that present across that value chain. Ask: What weather events could disrupt our operations? How might carbon pricing affect our costs? Are our customers demanding more sustainable products? Could new climate regulations change our industry? Document these initial thoughts - they're the foundation of your climate risk assessment. From there, the AASB S2 has prescriptive and implicit tasks that are required to be implemented.

Yes, but you can start with operational emissions in the first year, sources like fuel usage (Scope 1) and electricity (Scope 2). In the second year of reporting, you will need to include value chain emissions (Scope 3).

Focus on time horizons relevant to your business decisions, which link to your business strategic planning cycle. Although the standards do not explicitly specify time horizons, this could refer to short-term (e.g., 1-5 years), medium-term (e.g., 5-15 years), and longer-term (e.g., beyond 15 years) perspectives. Don't worry about predicting the exact future - focus on understanding how different climate scenarios could affect your business planning.

Even lower-emission companies have climate exposures. Consider your supply chain vulnerabilities, changing customer expectations, physical asset locations, and regulatory environment.

This depends on your internal capacity and timeline pressure. Many companies benefit from advisory support for initial assessments, methodology development, and peer benchmarking. However, SustainNext Climate Reporting enables you to complete complex climate science modelling and calculations in-house, reducing the need to rely on external technical expertise you may not have internally. Over time, climate disclosures will become part of business-as-usual reporting, so internal ownership of the process remains essential.