The Insider/
AASB S2 Reporting: what we learned in year one.

Group 2 entities begin their first AASB S2 reporting period on 1 July 2026. The first Group 1 reports are now public, and they show what a credible disclosure takes.

Across this series I have argued one thing consistently: the reporting that counts is the reporting that holds up under scrutiny, and the label on the cover matters less than the substance behind it. Group 1 now gives us the evidence: a wide gap between a document that exists and a disclosure that survives assurance.

What Group 1 showed

PwC reviewed 22 of the first Group 1 reports. Quality varied widely, with real gaps in what matters most: governance documentation, scenario analysis, and Scope 3 readiness. Those gaps will draw scrutiny as assurance tightens. Group 2 can learn from them before lodging. ASIC’s Regulatory Guide 280 sets out the thresholds and requirements.

Director liability

AASB S2 sits inside the Corporations Act. False or misleading climate statements carry penalties of up to $15 million or 10 per cent of annual turnover, whichever is greater. Directors can be held personally liable. That is the same legal weight as financial reporting.

The three-year modified liability period applies to Scope 3, scenario analysis, and transition plans only. Scope 1, Scope 2, and governance carry full liability from year one, with limited assurance from the first reporting period.

Three lessons from Group 1

Materiality is the foundation. Most Group 1 reporters underinvested here. A consultant holds a workshop, produces a matrix, then the work stops. Months later the assurer asks why a risk was excluded, and the documentation doesn’t hold the answers. AASB S2 applies a financial materiality lens: a risk is material if it could reasonably affect cash flows, access to finance, or cost of capital over the short, medium, or long term. That is the same framework your CFO uses under AASB Practice Statement 2. Use a different definition and your assurer will find the gap.

Use your existing governance structure. Nearly all Group 1 reporters assigned climate oversight to a risk or audit committee. What varied was whether the processes behind that claim existed: how often the board saw climate information, how it fed into the risk framework, whether it shaped strategy. ASIC expects climate risk to sit inside the same processes as financial and operational risk. We suggest you map your existing governance processes against what AASB S2 requires before you describe them in a report.

Scope 2 on the wrong basis. Many organisations track Scope 2 on a market-based basis, using renewable certificates or power purchase agreements to record low emissions. AASB S2 requires location-based reporting, using grid-average factors for the jurisdiction where energy is consumed. For WA operations on the South West Interconnected System, that means the WA grid factor regardless of your renewable contracts. The two figures can differ materially, so if your Scope 2 data collection has been market-based only, you will need to recalculate before your first report is due.

The ‘grace period’ is not a reason to delay

Group 2 faces mandatory Scope 3 disclosure from FY28. Scope 3 is the most time-intensive part of the standard, requiring value-chain engagement, estimation methods, and judgement about which categories are material. The Group 1 entities that disclosed it early had been building data infrastructure for years. Leave it to FY28 and you build under assurance pressure, with little room to correct errors. The GHG Protocol Corporate Standard is the methodology AASB S2 requires for emissions calculations. If your team is not already familiar with how Scope 3 categories apply to your operations and supply chain, that work should start now.

The supply chain moved first

Whether or not you meet the Group 2 thresholds, if you supply a Group 1 or Group 2 reporter, your emissions data is already being requested. Group 1 entities in their second reporting year need supplier data for mandatory Scope 3, and that pressure flows straight into WA’s resources, energy, and construction supply chains. The Budget consultation on unreasonable data requests will add proportionality, but the requests will keep coming. As I wrote after the Budget, falling below a threshold moves the conversation from regulator-led to market-led, and market-led is the more demanding. Clean, documented Scope 1 and Scope 2 data is now a commercial differentiator.

Status can shift mid-year too, which is why ASIC expects adequate systems in place before you know you are caught. I set out how the obligation crystallises at the EOFY in an earlier piece.

What we have learnt

Group 1 confirms the lesson this series keeps returning to. What withstands scrutiny is the work beneath the report: the materiality reasoning, the governance that operates, the data an assurer can trace. I made the same case on integrated and combined reporting, where the substance carries more weight than the label. Build that substance and the document follows.

Where to focus before July

If your first reporting period begins 1 July 2026, this is a preparation deadline. The report itself is not due until late 2027. What is due now is having the systems, governance, and data collection in place to produce a report that will withstand assurance and regulatory scrutiny when that time comes.

• Confirm your Group 2 status on a consolidated basis. Thresholds can be crossed through acquisitions, growth, or restructuring. Do not rely on a prior-year check.
• Complete or commission your AASB S2 materiality assessment. Document the reasoning behind every inclusion and exclusion.
• Map your actual governance processes. Identify who receives climate information, how often, and how it connects to risk management and strategy. Fix the gaps before you describe them in a disclosure.
• Calculate your location-based Scope 2 figure. If you have only market-based Scope 2 data, recalculate using grid-average factors before your reporting period closes.
• Begin Scope 3 data collection. Identify your material categories, engage your key suppliers, and start building the data infrastructure you will need for FY28.
• Brief your board on the directors’ declaration. This is a legal obligation. Make sure the people signing it understand what they are signing.

How ReGen works

We support clients across the four mandatory pillars: governance, strategy, risk management, and metrics and targets. We use eco-shaper, an AI-powered platform, to automate emissions data collection, calculation, and management across all scopes, with regionalised Australian factors for the location-based Scope 2 figure AASB S2 requires. We bring the technical and sector knowledge to turn that data into strategy and a defensible report.

My view

Group 1 has shown what passes and what will not. Group 2 has the time and the evidence to do better. The entities that use it will look very different by 2028 to those that treat July as a date to clear rather than a system to build.

To talk through where your organisation sits, contact Colin Davies.