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ReGen Strategic AASB S2 climate reporting team reviewing climate-related disclosures in their Perth office

AASB S2 Mandatory Climate Reporting

Australia’s mandatory climate disclosure regime is now in effect. We help organisations build the emissions foundation, prepare the sustainability report, and meet assurance requirements from year one.

Mandatory from 2025. We make it manageable.

About Climate Reporting

Under the Corporations Act 2001, large listed and private companies and financial institutions are required to prepare an annual sustainability report disclosing their climate-related risks and opportunities. The governing standard is AASB S2 Climate-related Disclosures, issed by the Australian Accounting Standards Board in September 2024.

Reporting is structured around four pillars. Each one calls for its own body of work.

  • Governance. How the board and management oversee climate-related risks and opportunities, including the skills and competencies available to do so.
  • Strategy. The climate-related risks and opportunities facing the organisation, their effect on its business model, strategy and financial position, and the resilience of its strategy tested through climate scenario analysis. The Corporations Act requires at least two scenarios: one consistent with 1.5°C of warming and one well exceeding 2°C.
  • Risk Management. The processes used to identify, assess, prioritise and monitor climate-related risks and opportunities, and how these integrate with overall risk management.
  • Metrics and Targets. Scope 1 and Scope 2 greenhouse gas emissions from the first reporting year, material Scope 3 emissions across the value chain from the second year, and climate-related targets.

Who needs to report and when

Reporting under AASB S2 is phased across three groups. A company is captured if it meets at least two of the three size criteria for its group, or through the NGER and asset owner entry routes. Group 1 entities are reporting now, and Group 2 entities began their first reporting year on 1 July 2026. 

    • Group 1
      • Financial years commencing on or after 1 January 2025
      • Two of three: 500+ employees, $500M+ consolidated revenue, or $1B+ consolidated gross assets
      • NGER reporters above the publication threshold
    • Group 2
      • Financial years commencing on or after 1 July 2026
      • Two of three: 250+ employees, $200M+ consolidated revenue, or $500M+ consolidated gross assets
      • All other registered NGER reporters or asset owners with %5B+ in assets
    • Group 3
      • Financial years commencing on or after 1 July 2027
      • Two of three: 100+ employees, $50M+ consolidated revenue, or $25M+ consolidated gross assets

    Group 3 entities with no material climate-related risks or opportunities may disclose that position in place of full climate statements, with an explanation of how they reached that conclusion.

    Organisations below the thresholds are also feeling the effect. In-scope entities must report material Scope 3 emissions from their second reporting year, so suppliers are already receiving data requests from larger customers building their value chain inventories.

    AASB S2 climate disclosures require independent assurance from the first reporting year, phasing to reasonable assurance of all disclosures for financial years commencing on or after 1 July 2030.

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      AASB S2 Reporting

      Full AASB S2 program in-house, in the order the work needs to happen. Evidence gathered early flows through to the disclosures, the report and the assurance file.

      Climate Reporting Services

      Preparation starts with a clear view of where an organisation stands. ReGen confirms the reporting group and first reporting period, then assesses current practice against each AASB S2 disclosure requirement. The result is a gap analysis and a practical roadmap setting out what needs to be in place, who owns it, and when it needs to be ready for assurance.

      • Confirm applicability, reporting group and first reporting period
      • Review existing governance, risk, strategy and emissions material against AASB S2
      • Deliver a gap analysis, prioritised roadmap and compliance checklist
      • Brief boards, executives and internal teams on their obligations

      A climate materiality assessment establishes which climate-related matters are material to the organisation and its investors, and sets the scope for everything that follows. For Group 3 entities, it also determines whether the organisation has material climate-related risks or opportunities to report.

      • Assess the materiality of climate-related matters to the organisation
      • Identify which Scope 3 categories are material across the value chain
      • Document the basis for Group 3 materiality conclusions

      The Governance pillar requires organisations to disclose how the board and management oversee climate-related risks and opportunities. ReGen designs governance arrangements that stand up to disclosure and assurance, and gives directors the understanding they need to make the directors’ declaration with confidence.

      • Review board and committee charters, delegations and reporting lines for climate oversight
      • Define management roles, controls and procedures for climate-related risks and opportunities
      • Assess board skills and competencies relating to climate
      • Draft Governance pillar disclosures

      ReGen identifies the physical risks, transition risks and opportunities that climate change presents across an organisation’s operations and value chain, then assesses and prioritises them through a structured climate change risk assessment. Results are integrated into the existing enterprise risk framework so climate risk is managed alongside every other business risk.

      • Identify acute and chronic physical risks across sites, assets and supply chains
      • Identify transition risks and opportunities across policy, legal, technology, market and reputation
      • Assess likelihood, consequence and time horizon using the organisation’s enterprise risk matrix
      • Integrate climate risk into risk registers, management processes and board reporting
      • Draft Risk Management pillar disclosures

      AASB S2 requires organisations to assess the resilience of their strategy using climate scenario analysis, and the Corporations Act specifies at least two scenarios: one consistent with 1.5°C of warming and one well exceeding 2°C. ReGen designs and conducts scenario analysis matched to each organisation’s exposure and capability, drawing on recognised scenario sets from the IPCC, IEA and NGFS, and translates the results into clear findings for the board and the report.

      • Select and tailor scenarios, time horizons and key assumptions
      • Assess how physical and transition drivers affect operations, assets and markets under each scenario
      • Assess the resilience of strategy and business model
      • Draft Strategy pillar disclosures on climate resilience

      An accurate, defensible carbon inventory is the bedrock of any AASB S2 report. ReGen calculates Scope 1, 2 and 3 greenhouse gas emissions in line with the GHG Protocol and NGER methods, using Australian emission factors and location-based Scope 2 reporting as required under AASB S2.

      • Set organisational and operational boundaries
      • Calculate Scope 1 and Scope 2 emissions from the first reporting year
      • Build out material Scope 3 categories across the value chain ahead of year two obligations
      • Track emissions monthly or quarterly against targets

       

      Partner offering with eco-shaper for automated carbon calculation

      Scope 3 emissions are the most significant data challenge for most Australian organisations preparing their first AASB S2 report. ReGen partners with eco-shaper, an AI-powered sustainability reporting platform, to automate the collection and calculation of emissions data. eco-shaper is GHG Protocol compliant, applies audited algorithms and regionalised Australian emission factors, and uses zero-touch data automation and supply chain engagement tools to capture Scope 3 data at scale. ReGen oversees the inventory, reviews the outputs and carries the results through to disclosure.

      With a clear emissions baseline and risk picture in place, ReGen turns the analysis into practical plans grounded in how an organisation operates and what is achievable within its context. This work supports the Strategy and Metrics and Targets pillars of AASB S2.

      • Emissions reduction strategies and decarbonisation plans inclusive of quantitative / qualitative goals / targets
      • Net zero plans with interim and long-term targets
      • Climate transition plans that set out how the organisation will adapt its strategy and business model
      • Emissions projections and pathway modelling

      Assurance applies from the first reporting year, so the data behind every disclosure needs to be complete, traceable and controlled. ReGen designs the data management systems and documentation that auditors will test.

      • Design data collection processes, ownership and internal controls
      • Prepare the basis of preparation documenting boundaries, methods, assumptions and estimates
      • Build an evidence file that supports limited and reasonable assurance

      AASB S2 reports must integrate with the financial reporting cycle, meet specific disclosure requirements under the standard, and be accompanied by a directors’ declaration. ReGen prepares the sustainability report itself, bringing the governance, risk, scenario, emissions and transition work together into one report structured across all four pillars, and supports the organisation through assurance review.

    Our Sustainability Team

    Colin Davies, Partner, Sustainability and ESG at ReGen Strategic

    Meet Colin Davies

    Partner, ESG & Sustainability

    Contact us

    Early preparation matters. Assurance applies from the first reporting year, and building robust governance, risk and data systems takes time. 

    Contact Colin Davies, Partner, to discuss where your organisation sits in the reporting timeline and the steps that make sense now. 

    ReGen Strategic
    Level 3 / 34 Parliament Place
    West Perth WA 6005

    ABN 66 619 642 858

    FAQ

    Frequently 
    asked questions

    AASB S2 Climate-related Disclosures is the Australian standard that sets out what organisations must report about climate-related risks and opportunities. The Australian Accounting Standards Board issued it in September 2024, based on the international standard IFRS S2. Under the Corporations Act, organisations in scope must prepare a sustainability report under AASB S2 each year and lodge it with their financial report and directors’ declaration.

    The report covers governance, strategy, risk management, and metrics and targets. It includes Scope 1, 2 and 3 greenhouse gas emissions (Scope 3 from the second year onwards), climate scenario analysis, and the current and expected financial effects of climate risks on the business.

    Reporting phases in across three groups. An organisation that lodges financial reports under Chapter 2M of the Corporations Act is in a group if, together with the entities it controls, it meets two of that group’s three size thresholds at the end of the financial year, or falls into the ‘Also captured’ column. Each group starts with its first financial year that begins on or after the date shown:

    Group

    First reporting year

    Size criteria (two of three)

    Also captured

    Group 1

    Financial years commencing on or after 1 January 2025

    500+ employees

    $500M+ consolidated revenue

    $1B+ consolidated gross assets

    NGER reporters at or above the NGER publication threshold

    Group 2

    Financial years commencing on or after 1 July 2026

    250+ employees

    $200M+ consolidated revenue

    $500M+ consolidated gross assets

    All other registered NGER reporters

    Asset owners such as superannuation funds with $5B+ in assets

    Group 3

    Financial years commencing on or after 1 July 2027

    100+ employees

    $50M+ consolidated revenue

    $25M+ consolidated gross assets

    n/a

    The sustainability report is lodged with your financial report and carries the same legal weight as your financial statements. Failing to prepare and lodge one breaches the Corporations Act. Directors who fail to take reasonable steps to comply can face civil penalties.

    ASIC administers the regime, with new powers to request the records behind your disclosures and to direct you to correct or update a statement. ASIC published its first review of 40 reports in September 2026. It found marked progress but flagged forward-looking disclosures, judgements and assumptions as areas to improve. It will review a sample of reports for years ending 30 June 2026 during 2026-27.

    Inaccurate climate statements also carry the risk of misleading or deceptive conduct claims. ASIC has already won penalties of more than $10 million in each of three greenwashing cases. Investors, lenders and your auditor will also read the report closely, and weak disclosures can lead to a qualified assurance conclusion.

    Yes. Directors sign a declaration on the sustainability report, and their usual duties of care and diligence apply. The law gives some breathing room in the first years.

    • Reasonable steps declaration: For financial years starting between 1 January 2025 and 31 December 2027, directors declare that they have taken reasonable steps to make sure the report complies with the Corporations Act and AASB S2. For financial years starting on or after 1 January 2028, they declare whether, in their opinion, the report complies.
    • Modified liability (safe harbour): Statements about Scope 3 emissions, scenario analysis and transition plans are protected for financial years starting between 1 January 2025 and 31 December 2027. This includes the inputs and assumptions behind them. In the first year, for financial years starting in 2025, all forward-looking climate statements required by AASB S2 are also protected. During this period, only ASIC can act on a protected statement, apart from criminal proceedings. Investors and other private parties cannot sue over them.

    The protection has clear limits:

    • It covers statements in the sustainability report and the auditor’s report on it.
    • It falls away when you choose to repeat the statements in investor presentations, media releases or other voluntary materials. Statements repeated in documents the law requires, such as the operating and financial review or continuous disclosure notices, keep the protection. It excludes voluntary disclosures that go beyond AASB S2, and material cross-referenced from elsewhere.
    • ASIC can still direct you to correct a protected statement. The corrected statement is also protected.

    Yes, once they reach a certain size. The rules apply to any organisation that must lodge financial reports under Chapter 2M of the Corporations Act, and that includes large proprietary companies. A private company that meets the Group 1, 2 or 3 thresholds reports on the same timeline as a listed company of similar size. NGER reporting only brings a private company into scope if it already has to lodge financial reports under Chapter 2M.

    Group 3 organisations with no material climate-related risks or opportunities can lodge a statement saying so in place of full disclosures. The statement must explain how they reached that conclusion.

    The Government has proposed lifting the large proprietary company thresholds to $100 million in revenue and $50 million in gross assets. The 100-employee test would stay the same. That would remove around an estimated 1500 private companies from Group 3. As of October 2026 the change is announced but not yet law, and Treasury has confirmed it won’t affect reporting for 2026-27. Companies between the current and proposed thresholds should keep preparing until it is legislated.

    Private companies below the thresholds still feel the effects. Large reporting organisations need Scope 3 data from their suppliers, and lenders are asking for climate information too.

    Yes. It’s a strong starting point for Scope 1 and 2 emissions, though you will usually need to fill some gaps:

    • Boundary: NGER covers Australian facilities under your operational control. AASB S2 covers the same entity as your financial statements, so it includes any overseas operations you consolidate. You measure emissions using a GHG Protocol consolidation approach that you choose and disclose: operational control, financial control or equity share. If you choose an approach other than operational control, your NGER figures need adjusting. You must also show Scope 1 and 2 separately for the consolidated group and for other investments such as joint ventures and associates.
    • Reporting period: NGER runs from July to June. If your financial year ends on a different date, the figures need adjusting.
    • Scope 3: NGER covers Scope 1 and 2 only. AASB S2 requires Scope 3 from your second reporting year.
    • Methods and global warming potentials: AASB S2 already allows NGER measurement methods. Amendments made in December 2025 (AASB S2025-1) also let you keep NGER’s global warming potential values (AR5) for emissions measured under NGER, so you won’t need to recalculate them. The amendments apply to financial years starting on or after 1 January 2027, and you can adopt them early. Emissions outside NGER, such as overseas operations, follow the GHG Protocol and the latest IPCC values (currently AR6).

    Your NGER figures will also now be assured as part of the sustainability report. The controls behind them need to hold up under audit.

    AASB S2 builds on the TCFD framework and uses the same four pillars, so organisations with TCFD-aligned reporting have a head start. The differences lie in what is required and the legal weight behind it:

    • Mandatory: The report is lodged with your financial report, is signed off by directors and is lodged with ASIC.
    • Assured: It is independently assured, with assurance rising to reasonable assurance over time.
    • Scenario analysis: At least two scenarios are required: one aligned with 1.5°C and one where warming well exceeds 2°C.
    • Scope 3 emissions: These are required from the second reporting year, including financed emissions for financial institutions.
    • Financial effects: You must disclose current and expected effects on financial position, performance and cash flows. Figures are required unless the effects can’t be separately identified or measured with enough certainty.
    • Linked to the accounts: The report uses the same reporting entity and period as your financial statements.
    • Set metrics: These include climate-related capital spending, internal carbon prices, and how climate factors into executive pay.

    TCFD disbanded in 2023 and handed its monitoring role to the ISSB. The ISSB’s IFRS S2 is the basis for AASB S2.

    Allow 12 to 18 months for a first report, from scoping through to lodgement. A typical program runs like this:

    1. Gap analysis and scoping (1 to 2 months). Confirm your reporting group, map current reporting against AASB S2, and set governance and owners.
    2. Climate risk and opportunity assessment (2 to 3 months). Identify material risks and opportunities across short, medium and long timeframes.
    3. Scenario analysis (2 to 4 months). Test how resilient your strategy is under at least two warming scenarios.
    4. Emissions data and systems (ongoing). Have Scope 1 and 2 in place before the reporting year starts, with Scope 3 to follow.
    5. Dry run and assurance readiness (2 to 3 months). Draft the disclosures, test controls and review them with your auditor.
    6. Board review and sign-off.

    Your data must cover the full reporting year, so your systems should be running from its first day. Group 2 organisations are already in their first reporting year. Group 3 starts on 1 July 2027, so organisations in that group should begin preparing now.