SustainNext Climate Reporting

AASB S2 is Australia's new mandatory climate disclosure standard, and it sits within the Australian Sustainability Reporting Standards (ASRS) issued by the AASB. It requires in-scope organisations to report how climate change affects their business and its financial performance. In practice, climate reporting in Australia means telling the story of how global warming, extreme weather, and the transition to clean energy could impact your company, and how those factors affect your current and future performance, financial position and cash flows. It is one of the most significant ESG and sustainability reporting changes Australian businesses have faced.

You may be in scope for mandatory climate reporting in Australia if your organisation is required to prepare financial statements under Chapter 2M of the Corporations Act 2001. Mandatory reporting is being introduced in phases: Group 1 entities must comply for financial years ending on or after 1 January 2025; Group 2 entities 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 and carbon reporting across Australia under the Australian Sustainability Reporting Standards.

You are likely in scope if your organisation meets at least two of the three size criteria for a group (revenue, assets, and employee headcount), and the thresholds step down with each group:

Group 1: 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: 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: revenue of $50M or more, assets of $25M or more, and 100 or more employees.

Climate-related disclosure 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. It is a core part of climate risk reporting: for example, a retailer might need to explain how extreme weather could disrupt its supply chain, or how shifting consumer preferences for sustainable products could affect sales. Under AASB S2, this sits alongside your wider sustainability reporting obligations in Australia.

Start by understanding your business's value chain and the climate risks and opportunities across it. That climate risk assessment is the foundation everything else builds on. 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; from there, AASB S2 sets out the prescriptive and implicit tasks you'll need to implement to produce your first sustainability report in Australia.

Yes, but you can start with operational emissions in your first year of carbon reporting. That means sources like fuel usage (Scope 1) and electricity (Scope 2) to begin with, then adding value chain emissions (Scope 3) in your second year. Emissions reporting in Australia builds up over time, so you are not expected to capture everything at once.

Focus on the time horizons relevant to your business decisions, aligned to your strategic planning cycle. While the standards don't explicitly specify time horizons, these typically span short-term (around 1–5 years), medium-term (around 5–15 years), and longer-term (beyond 15 years). The aim isn't to predict the exact future; it's to understand how different climate scenarios could affect your business planning and your climate risk reporting.

Yes. Even lower-emission companies have climate exposures worth analysing, and climate risk reporting under AASB S2 applies regardless of your emissions profile. Consider your supply chain vulnerabilities, changing customer expectations, the physical locations of your assets, and your regulatory environment. Emissions reporting is only one part of the picture; the broader ESG and sustainability risks matter too.

It depends on your internal capacity and timeline pressure, but you have options for both. Many companies benefit from advisory support for initial assessments, methodology development and peer benchmarking. That said, SustainNext Climate Reporting enables you to complete complex climate science modelling, carbon reporting and emissions reporting calculations in-house, reducing your reliance on external technical expertise you may not have. Over time, climate and sustainability reporting will become part of business-as-usual.