Mandatory climate reporting. Are you ready?
Climate-related financial disclosures are mandated for many Australian companies commencing from 1 January 2025. The climate disclosure standard, AASB S2, is based on the International Sustainability Standards Board (ISSB)’s climate standards, IFRS S2 and represents the biggest change to corporate reporting in decades. Companies are expected to disclose climate-related risks and opportunities that will impact their business prospects over the short, medium and long term. We expect that more granular reporting requirements will drive action to reduce emissions through strategic imperatives.
To assist Board members respond to this change, we have prepared an updated version of ‘A director's guide to mandatory climate reporting’ via the Climate Governance Initiative (CGI) Australia jointly written by Deloitte Australia, the Australian Institute of Company Directors and MinterEllison. The second edition of this landmark publication was released on Tuesday, 25 September 2024. This document has been developed as a guide for directors seeking to understand and navigate the complex landscape of climate reporting in ensuring their organisations are ready to meet mandatory reporting obligations.
The Guide is structured into three chapters:
- Chapter 1 provides an overview of the Australian Sustainability Reporting Standards including the mandatory climate reporting framework under AASB S2.
- Chapter 2 sets out the legal duties and responsibilities of directors in respect of climate reporting. This includes a consideration of directors’ duties in respect of financial reporting, due care and diligence, and overseeing appropriate processes to avoid misleading or deceptive conduct.
- Chapter 3 provides practical steps that directors can take to meet their obligation to report on climate related risks and opportunities in respect of the topics of governance, strategy and risk management, and metrics and targets outlined in AASB S2.
Deloitte Australia’s Audit and Assurance Managing Partner, Jo Gorton, says, “Climate change poses a financial risk which management and directors currently need to address. The AASB standards establish disclosure requirements that aim to enhance the link between sustainability risks and opportunities and financial reporting. The CGI Climate Guide will enable our clients to better navigate the quickly evolving landscape of climate reporting and make sure their organisations are well-prepared for the transition.”
Authors:
Jonathan Streng
Director, Audit & Assurance
Rebekah Cheney
Director, Climate Governance Lead, Deloitte Climate & Sustainability
Partner, Audit & Assurance
