If you've heard the term 'AASB S2' recently and wondered what it means for your business, you're not alone. It's the most significant change to corporate reporting obligations in Australia in decades   and it's already in effect for the country's largest organisations. 

This guide explains what AASB S2 is, who it applies to, what you'll need to disclose, and what steps you should take right now to prepare. 

AASB S2 is a new financial reporting standard published by the Australian Accounting Standards Board (AASB). Its full name is 'AASB S2 Climate-related Disclosures', and it forms part of Australia's broader Australian Sustainability Reporting Standards (ASRS) framework. 

AASB S2 requires eligible organisations to disclose climate-related financial information   including greenhouse gas emissions, climate risks and opportunities, governance structures, and transition plans   in their annual reports. It is directly modelled on the International Sustainability Standards Board's IFRS S2 standard, meaning it aligns with what major international investors and regulators expect. 

The standard was passed into law in August 2024 as part of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. 

AASB S2 applies to a wide range of Australian entities that meet certain size thresholds. The rollout happens across three groups: 

• Group 1   Large entities: 500 or more employees, or $1 billion or more in consolidated gross assets, or $1 billion or more in consolidated annual revenue. Reporting starts for financial years commencing on or after 1 January 2025. 

• Group 2   Medium-large entities: 250 or more employees, or $500 million or more in consolidated gross assets, or $500 million or more in consolidated annual revenue. Reporting starts for financial years commencing on or after 1 July 2026. 

• Group 3   Smaller listed entities and others: Reporting starts for financial years commencing on or after 1 July 2027. 

Entities must meet at least two of the three criteria (employees, assets, revenue) within their group to be captured. However, many businesses that fall below these thresholds will still face indirect pressure from their supply chain relationships with Group 1 and 2 entities, who will need Scope 3 emissions data from their suppliers. 

AASB S2 requires disclosures across four core pillars, which mirror the TCFD (Task Force on Climate-related Financial Disclosures) framework: 

• Governance: How your board and management oversee and manage climate-related risks and opportunities. This includes board oversight structures, management roles, and accountability mechanisms. 

• Strategy: How identified climate risks and opportunities affect your business model, financial position, and strategy   including scenario analysis to assess resilience under different climate pathways. 

• Risk Management: The processes you use to identify, assess, prioritise, and manage climate-related risks, and how these integrate with your overall enterprise risk management framework. 

• Metrics and Targets: Quantitative data including Scope 1, 2, and 3 greenhouse gas emissions, climate-related targets (such as net zero commitments), and progress against those targets. 

The metrics and targets section is where most organisations feel the most immediate pressure, because it requires robust, auditable emissions data   not estimates or high-level summaries. 

ASRS (Australian Sustainability Reporting Standards) is the overall regulatory framework. AASB S2 is the specific standard within that framework that covers climate disclosures. Think of ASRS as the umbrella legislation, and AASB S2 as the technical rulebook underneath it. A second standard, AASB S1 (general sustainability disclosures), may follow in the future, but AASB S2 is the immediate priority for Australian businesses. 

Many Australian businesses have been producing voluntary sustainability reports for years   following frameworks like GRI, CDP, or the UN SDGs. AASB S2 is fundamentally different in three ways. First, it is mandatory and legally enforceable, not voluntary. Second, it requires the same level of rigour as financial reporting, meaning data must be auditable and defensible to the same standard as your balance sheet. Third, it is regulated by ASIC (the Australian Securities and Investments Commission), which has already signalled it will enforce greenwashing provisions aggressively, with fines of up to $50 million or more. 

The most important first step is to understand your reporting timeline based on which group your organisation falls into. From there, a pragmatic preparation roadmap typically covers: 

• Conducting a readiness assessment to identify gaps in your current governance, data, and reporting processes 

• Establishing or formalising board-level climate governance structures 

• Beginning to collect and validate Scope 1, 2, and 3 emissions data 

• Implementing a climate risk identification process aligned with scenario analysis requirements 

• Adopting a carbon accounting software platform to automate data collection and report generation 

The cost of compliance rises significantly the longer you wait. Organisations that start 12–24 months before their reporting deadline consistently achieve better data quality at lower cost than those that leave preparation to the last minute. 

💡 Enviro Capture: Enviro Capture's carbon accounting platform is purpose-built for AASB S2 compliance. Our software automates Scope 1, 2 and 3 emissions data collection, applies GHG Protocol-compliant emission factors, and generates audit-ready reports aligned with ASRS requirements. Book a free demo at envirocapture.au to see it in action. 

• AASB S2 is Australia's new mandatory climate disclosure standard, part of the ASRS framework 

• It applies to large and medium-large Australian entities, rolling out across three groups from FY2025 to FY2027 

• It requires disclosures across governance, strategy, risk management, and GHG metrics & targets 

• Unlike voluntary sustainability reporting, AASB S2 is legally enforceable with ASIC oversight 

• Starting early is critical   compliance costs and data quality both benefit from longer preparation timelines