AASB S2 frequently asked questions

If you're navigating AASB S2 requirements, you're not alone in having questions. This comprehensive FAQ addresses common queries about Australian sustainability reporting standards, compliance timelines, and practical implementation. Whether you're determining if your organisation needs to comply, understanding the relationship between AASB S2 and other standards, or planning your reporting approach, these answers will help clarify key aspects of Australia's mandatory climate reporting framework.

What is the difference between AASB S2 and AASB 2?

AASB S2 is the sustainability reporting standard for climate-related disclosures, while AASB 2 relates to accounting for share-based payments. They serve entirely different reporting purposes.

How does AASB S2 relate to ASRS?

AASB S2 is part of the Australian Sustainability Reporting Standards (ASRS) framework. ASRS encompasses both the mandatory AASB S2 standard for climate reporting and the voluntary AASB S1 standard for broader sustainability disclosures.

Do private companies need to comply with AASB S2?

Yes, private companies meeting the size thresholds described in the group classification need to comply, regardless of whether they're listed or private. The requirements are based on financial metrics and employee numbers, not listing status.

What happens if we don't comply with AASB S2?

Non-compliance with AASB S2 could lead to regulatory action under the Corporations Act, potentially including penalties for directors. The standard forms part of mandatory reporting requirements for eligible entities.

Can we use our existing sustainability report to satisfy AASB S2?

Existing sustainability reports may provide some of the required information, but AASB S2 has specific disclosure requirements that need to be addressed. A gap analysis between current reporting and AASB S2 requirements is recommended.

What happened to TCFD?

TCFD framework was absorbed into the ISSB's IFRS S2 standard. This is largely what makes up AASB S2.

How detailed do our Scope 1 and 2 emissions disclosures need to be?

The standard requires disclosure of absolute gross Scope 1 and 2 emissions in metric tonnes of CO₂ equivalent, calculated using the GHG Protocol. Disclosures include methodology, significant assumptions, and the consolidation approach used.

What is "materiality" in the context of AASB S2?

According to AASB S2, information is considered material "if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make." This definition aligns with traditional financial materiality concepts in accounting standards, but specifically extends to climate-related disclosures that affect investment, lending, and other resource allocation decisions.

What is the mandatory climate reporting timeline in Australia?

Australia's mandatory climate reporting begins January 2025 for Group 1 organisations, with Group 2 following from July 2026 and Group 3 from July 2027. The phased implementation allows businesses time to develop their reporting capabilities, with assurance requirements increasing gradually over a five-year period.