In late 2024, the Australian Accounting Standards Board (AASB) introduced a set of sustainability disclosure requirements called the Australian Sustainability Reporting Standards (ASRS).
AASB S1 and AASB S2 are part of these requirements. The first wave of in-scope companies has already started to report under these rules, and a much larger group of Australian businesses will join them starting in mid-2026.
In this guide, we break down what AASB S1 and AASB S2 are, what they require, and what your next steps should be if you are in scope.
The ASRS is made up of two standards, and it is easy to mix them up.
In practice, when people talk about Australia's new mandatory climate reporting regime, they mean AASB S2. Given that it is mandatory, it is the standard that the rest of this guide will focus on.
AASB S2 will phase in across three groups broken down by company size and structure. To fall into a given group, a company generally needs to meet at least two of its three size thresholds, or qualify as a National Greenhouse and Energy Reporting (NGER) reporter or large asset owner.
Applies to annual reporting period beginning on or after: January 1st, 2025
Thresholds:
Applies to annual reporting period beginning on or after: July1st, 2026
Thresholds:
Applies to annual reporting period beginning on or after: July 1st, 2027
Thresholds:
Entities who qualify as part of Group 1 are already in their first reporting period, followed by Group 2 this past July. At Green Project, we’re actively supporting companies who qualify under Group 1 and Group 2 with their AASB S2 compliance. And given how much groundwork mandatory climate reporting requires, Group 3’s reporting deadline is closer than it looks.
AASB S2 disclosures are organized around the same four pillars used by AFRS S2 and TCFD.
The first pillar outlines how the company’s board and senior management oversee climate-related risks and opportunities, including named roles and how issues are escalated.
This pillar includes the transition risks (policy, technology, market, etc.) and physical risks (extreme weather, chronic climate shifts, etc.) that could affect the business, along with a climate transition plan.
As part of this pillar, companies must run scenario analysis using at least two pathways: one consistent with a 1.5°C warming, and one representing a high-warming scenario that exceeds 2°C
This pillar covers the processes used to identify, assess, and monitor climate-related risks; this should be integrated into the company’s broader risk management framework rather than treated as a standalone exercise.
The final pillar includes all quantitative and qualitative measures, including Scope 1, 2, and 3 emissions, plus any climate-related targets and all relevant progress against them.
One notable difference from IFRS S2 is that AASB S2 does not currently require industry-based metrics or reference SASB standards. The AASB is working on a separate project for industry-specific disclosure, with mandatory requirements expected by 2030.
Scope 3 typically makes up the majority of a company’s total footprint, and it is usually the hardest part of any climate disclosure to get right.
AASB S2 gives companies some breathing room here. Scope 1 and 2 emissions are required from Year 1 of reporting, while Scope 3 comes with a one-year grace period and only becomes mandatory from Year 2 onwards.
While that grace period is useful, it is not a reason to delay data collection.
Reliable Scope 3 data takes time to set up properly. Companies that start engaging suppliers and mapping their highest-emitting categories now will be in a far better position by the time Year 2 arrives than those who wait until the deadline is closer.
The National Greenhouse and Energy Reporting (NGER) Scheme is a parallel disclosure regime that has been in place in Australia since 2008. It only covers Australian operations, and uses Global Warming Potential (GWP) values from the IPCC’s Fifth Assessment Report (AR5). AASB S2, on the other hand, requires values from the latest Assessment Report (currently AR6)
To ease the burden on companies that report under both, AASB S2 does allow companies already in scope for NGER to use their existing NGER emissions calculations based on GWP values from ARS for their AASB S2 disclosures. It is a helpful accommodation, but NGER reporting alone doesn’t satisfy AASB S2’s broader requirements, which extend to global operations, Scope 3 emissions, and scenario analysis.
AASB S2 disclosures require external assurance, and the level of assurance required increases over time.
In Year 1, assurance applies to governance disclosures and Scope 1 and 2 emissions, generally at a limited assurance level. Reasonable assurance, the same standard applied to financial audits, phases in over the subsequent reporting years.
Non-compliance with AASB S2’s assurance and compliance requirements can carry real consequences. False or misleading claims can result in penalties up to $15 million or 10% of annual turnover, whichever is greater, and directors can be held personally liable.
To account for the uncertainty involved in early reporting, a modified liability period applies to certain statements, including the scenario analysis, transition plans, and Scope 3 emissions, for the first three years of the regime. This restricts who can sue over these disclosures—enforcement is limited to ASIC rather than private litigants—but doesn’t lower the underlying compliance standard.
Regardless of which group your company falls into, the same preparatory groundwork applies:
AASB S2 represents a significant shift in how Australian companies report on climate risk, and the businesses that work with companies like Green Project to start preparing early will find the transition far more manageable than those that wait.
Do I need to report Scope 3 emissions in Year 1?
It depends if your entity is in Group 1, 2, or 3. Either way, Scope 3 comes with a one-year grace period and becomes mandatory from Year 2 of reporting. Scope 1 and 2 emissions are required from Year 1.
Does NGER reporting satisfy my AASB S2 obligations?
Not on its own. NGER reporters can use their existing NGER emissions calculations as part of their AASB S2 disclosures, but AASB S2 has broader requirements, including global operations, Scope 3 emissions, and climate scenario analysis, that NGER reporting does not cover.
What happens if my company is not yet in scope?
Companies outside the current groups are not yet required to report under AASB S2. That said, many find it useful to begin building emissions data and reporting processes ahead of time, particularly if they are suppliers to larger companies that are already in scope and beginning to request this data.
What scenarios do companies need to model?
At least two: one consistent with 1.5°C warming, representing an orderly transition to a lower-carbon economy, and one representing a high-warming scenario that exceeds 2°C.
