GROUP 2 - REPORTING FROM JULY 2026

You have months,
not years, to prepare.

Q: What is AASB S2 and when does mandatory climate reporting begin?

AASB S2 Climate-related Disclosures is Australia’s mandatory standard for climate-related financial disclosures, part of the Australian Sustainability Reporting Standards (ASRS). It is aligned with IFRS S2 and built on the TCFD framework. Mandatory reporting began for Group 1 entities from 1 January 2025, with Group 2 following from 1 July 2026 and Group 3 from 1 July 2027.

Q: What’s the difference between AASB S1 and AASB S2?

AASB S2 is the mandatory standard covering climate-related disclosures only. AASB S1 is a voluntary standard covering broader sustainability-related risks and opportunities (e.g., biodiversity, social issues). Only AASB S2 is currently required by law under the Corporations Act.

Q: What are the penalties for non-compliance with AASB S2?

Non-compliance carries civil penalties mirroring those for financial reporting breaches under the Corporations Act. This includes director liability for misleading disclosures. ASIC has enforcement powers, though for the first 3 years, private enforcement actions for Scope 3, scenario analysis, and transition plan disclosures are limited to regulator-only (ASIC) action.

Q: Do I need to report Scope 3 greenhouse gas emissions immediately?

No. Scope 3 GHG emissions reporting is optional in your first reporting year. It becomes mandatory from your second reporting period. However, most organisations start value chain mapping and carbon accounting for Scope 3 in Year 1 to ensure they have credible data ready for Year 2 disclosure.

Q: When should Group 2 entities start preparing for AASB S2?

Now. Although Group 2’s first reporting period begins from 1 July 2026, organisations need carbon accounting systems, climate governance structures, auditor engagement, and a gap analysis completed before the reporting period starts. The first sustainability report will be due in H1 2028.

A step-by-step compliance checklist for Australia’s mandatory climate reporting regime

Group 2 entities begin mandatory climate-related financial disclosures for financial years starting 1 July 2026 under the Australian Sustainability Reporting Standards (ASRS). If your organisation has $200M+ revenue, $500M+ assets, or 250+ employees, this free readiness assessment checklist covers everything from greenhouse gas emissions and carbon accounting to scenario analysis and ASIC lodgement.

40+

Checklist items

Step process

Disclosure pillars

Emission scopes

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⏰ Group 2 entities - your first reporting period begins 1 July 2026. Climate governance, GHG data systems, and auditor engagement must be in place before the clock starts. Directors face personal liability for non-compliant disclosures.

What is AASB S2?

AASB S2 Climate-related Disclosures is Australia’s mandatory standard for climate-related financial disclosures, embedded in the Corporations Act 2001. It is part of the Australian Sustainability Reporting Standards (ASRS) and is closely aligned with the global baseline set by IFRS S2, issued by the International Sustainability Standards Board. Built on the TCFD framework, it requires in-scope entities to prepare an annual sustainability report disclosing climate-related risks and opportunities - including greenhouse gas (GHG) emissions, scenario analysis, climate governance, and transition plans. Non-compliance carries civil penalties and director liability under the Corporations Act.

Who this applies to

Group 2 Thresholds

You’re in Group 2 if you meet at least two of three size criteria, OR are an NGER reporter not in Group 1, OR an asset owner with AUM ≥ $5 billion. Entities must report under Chapter 2M of the Corporations Act.

Revenue

≥ $200 million

Gross Assets

≥ $500 million

Employees

≥ 250

NGER

NGER reporter (not in Group 1)

Asset Owner

AUM ≥ $5 billion

First Period

FY beginning on or after 1 Jul 2026

What you must disclose

The Four Pillars of AASB S2

Climate-related disclosures under AASB S2 are structured around four pillars, aligned with the TCFD framework. All four must be addressed in your sustainability report, lodged with ASIC.

🏛

Climate Governance

Board and management oversight, directors’ duties, controls, and procedures for monitoring climate-related risks and opportunities. Includes skills assessment and reporting cadence.

🧭

Climate Strategy

Material climate risks, scenario analysis under 1.5°C and >2°C warming pathways, anticipated financial effects, and climate transition plans aligned with net zero targets.

🛡

Risk Management

How climate-related risks are identified, assessed, prioritised, and integrated into your enterprise risk management framework.

📊

Metrics & Targets

Scope 1 & Scope 2 GHG emissions (Year 1), material Scope 3 emissions (Year 2), carbon accounting methodology, climate targets, and capital deployed.

The operational challenge

Scope 2: get your energy data house in order now

You have months to prepare, not years. With 250+ employees, your organisation likely spans multiple sites, states, and electricity retailers. The time to start consolidating energy data across all locations is now - not when the reporting period is already underway.

For franchise networks, hospitality groups, healthcare providers, and multi-site retail chains, Scope 2 emissions data is the biggest operational lift. You need kWh consumption data from every NMI, across every retailer, mapped to state-specific emission factors. That's not a one-month project.

Start now: Identify all electricity accounts across your portfolio, centralise billing data, and establish a process for ongoing collection. Multi-site energy management platforms can aggregate this automatically from Day 1 of your reporting period.

Inside the checklist

What you’ll get

A comprehensive readiness assessment and gap analysis tool covering every AASB S2 requirement - from carbon accounting to climate strategy and sustainability assurance.

AASB S2 Compliance Readiness Checklist - Group 2

40+ items

Conduct a gap analysis against AASB S2 requirements - Compare current ESG reporting practices against all climate-related disclosure obligations

Establish climate governance structures - Board oversight, management accountability, directors’ duties, internal controls for sustainability data

Map Scope 1, 2, and 3 GHG emission sources - Direct emissions, purchased energy, and value chain carbon footprint - using appropriate emission factors

Engage suppliers for Scope 3 carbon accounting data - Establish data-sharing processes for material value chain greenhouse gas emissions

Plan scenario analysis under two warming pathways - 1.5°C and >2°C scenarios covering transition risks and physical climate risks

+ 35 more items covering risk management, transition plans, net zero alignment, assurance readiness, and ASIC lodgement...

Key dates

Your Group 2 Timeline

Critical milestones for Group 2 entities under Australia’s mandatory climate reporting regime.

NOW – JUN 2026

Preparation window

Conduct gap analysis, build carbon accounting systems, train board, engage auditor

1 JUL 2026

First reporting period begins

Mandatory climate-related disclosures are live - Scope 1 & 2 GHG data collection starts

H1 2028

First sustainability report due to ASIC

Lodge alongside financial statements under the Corporations Act

YEAR 2 (FY28)

Scope 3 emissions become mandatory

Material value chain greenhouse gas emissions must be disclosed

1 JUL 2030

Reasonable assurance required

Full reasonable assurance across all climate-related financial disclosures

Frequently Asked Questions

What is AASB S2 and when does mandatory climate reporting begin?

AASB S2 Climate-related Disclosures is Australia’s mandatory standard for climate-related financial disclosures, part of the Australian Sustainability Reporting Standards (ASRS). It is aligned with IFRS S2 and built on the TCFD framework. Mandatory reporting began for Group 1 entities from 1 January 2025, with Group 2 following from 1 July 2026 and Group 3 from 1 July 2027.

What’s the difference between AASB S1 and AASB S2?

AASB S2 is the mandatory standard covering climate-related disclosures only. AASB S1 is a voluntary standard covering broader sustainability-related risks and opportunities (e.g., biodiversity, social issues). Only AASB S2 is currently required by law under the Corporations Act.

What are the penalties for non-compliance with AASB S2?

Non-compliance carries civil penalties mirroring those for financial reporting breaches under the Corporations Act. This includes director liability for misleading disclosures. ASIC has enforcement powers, though for the first 3 years, private enforcement actions for Scope 3, scenario analysis, and transition plan disclosures are limited to regulator-only (ASIC) action.

Do I need to report Scope 3 greenhouse gas emissions immediately?

No. Scope 3 GHG emissions reporting is optional in your first reporting year. It becomes mandatory from your second reporting period. However, most organisations start value chain mapping and carbon accounting for Scope 3 in Year 1 to ensure they have credible data ready for Year 2 disclosure.

When should Group 2 entities start preparing for AASB S2?

Now. Although Group 2’s first reporting period begins from 1 July 2026, organisations need carbon accounting systems, climate governance structures, auditor engagement, and a gap analysis completed before the reporting period starts. The first sustainability report will be due in H1 2028.

Get the free AASB S2
readiness assessment checklist

40+ actionable items covering climate-related disclosures, greenhouse gas emissions, carbon accounting, scenario analysis, gap analysis, and ASIC lodgement.