From 1 January 2025, sustainability reporting in Australia shifts from voluntary to mandatory. Large organisations, and eventually mid-sized businesses, must publicly report how climate risks affect their operations, finances, and strategy. This change is driven by the introduction of the Australian Sustainability Reporting Standards (AASB S1 and AASB S2), modelled closely on the global IFRS framework.

In this article, we’ll break down what AASB S2 actually means, who must comply, what needs to be disclosed, and how accurate energy data from partners like Termina will play a critical part in meeting these new reporting obligations.
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What Is AASB S2?

AASB S2 is Australia’s new mandatory standard for climate-related financial disclosures.
It requires businesses to publicly report:
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• Climate-related risks and opportunities
  
• Impacts on financial performance and strategy
  
• Governance and oversight structures
  
• Greenhouse gas emissions (Scopes 1, 2 and over time Scope 3)
  
• Climate transition plans and progress against targets
  
• Scenario analysis against future climate outcomes
  
  

AASB S2 is built on the global IFRS S2 Climate-Related Disclosures Standard, but tailored to Australian law and terminology.

This means sustainability reporting is no longer a branding exercise. It becomes an auditable, regulator-backed obligation, similar in seriousness to financial reporting.

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Who Needs To Comply With AASB S2?

The rollout will occur over three years, capturing large organisations first and medium businesses soon after. Each group requires 2 of the 3 following criteria to be met:

Group 1 – FY25

(First to report)

• Revenue ≥ $500 million
  
• Assets ≥ $1 billion
  
• ≥ 500 employees
  
  

Group 2 – FY26
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• Revenue ≥ $200 million
  
• Assets ≥ $500 million
  
• ≥ 250 employees
  
  

Group 3 – FY27
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• Revenue ≥ $50 million
  
• Assets ≥ $25 million
  
• ≥ 100 employees
  
  

In practice, even businesses below these thresholds will feel supply-chain pressure because large organisations must measure Scope 3 emissions, which include emissions from suppliers, freight companies, contractors, and service providers.

If you sell to large companies, they will eventually request your energy and emissions data as part of procurement.

Why AASB S2 Matters for Australian Businesses
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1. It’s now mandatory

If your business meets the thresholds, non-compliance is not an option, penalties and regulator oversight apply.

2. Climate impacts must be linked to finances

AASB S2 requires businesses to show how climate risks affect profit, cash flow, asset values, and long-term strategy.

3. Emissions must be measurable and auditable

No more estimates or marketing claims, actual energy usage and emissions data is required.

4. Investors and lenders will rely on this information

Banks, insurers, and investors will use AASB S2 disclosures to evaluate creditworthiness and risk.

5. Supply-chain transparency becomes essential

Larger corporations will demand emissions data from their suppliers, making accurate reporting a competitive advantage.
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What Businesses Must Disclose Under AASB S2
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The reporting framework covers four key pillars:

1️⃣ Governance

How the board and management oversee climate-related issues.
Businesses must describe:
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• Roles and responsibilities
  
• Reporting lines
  
• Controls and internal systems
  
  

2️⃣ Strategy

How climate risks and opportunities affect:
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• Business model
  
• Financial planning
  
• Investment decisions
  
• Revenue and costs
  
• Transition plans
  
  

3️⃣ Risk Management

How climate risks are identified, assessed, prioritised, and managed.

This includes both:

• Physical risks (heatwaves, storms, supply interruptions)
  
• Transition risks (policy changes, carbon pricing, technology shifts)
  
  

4️⃣ Metrics and Targets

Businesses must disclose:
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• Scope 1 emissions (direct onsite)
  
• Scope 2 emissions (purchased electricity)
  
• Scope 3 emissions (value-chain, where required)
  
• Energy consumption and intensity
  
• Reduction targets and progress
  
  

These figures will gradually require limited assurance, meaning they must be verifiable and accurate.

Why Energy Data Is the Foundation of AASB S2

The backbone of climate reporting is energy consumption.

That’s because Scopes 1 and 2 emissions, the first to be mandated, are calculated directly from:
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• Electricity usage
  
• Gas consumption
  
• Fuel consumption
  
• Onsite generation
  
• Renewable energy certificates
  
• GreenPower purchases
  
• PPAs and solar outputs
  
  

Without accurate and complete energy data, it is impossible to produce compliant emissions numbers.

This is where Termina plays a critical role.

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How Termina Helps You Prepare for AASB S2

Termina’s analytical and procurement capabilities provide businesses with the exact information needed for climate reporting:

✔ Accurate electricity and gas usage data

Collected, structured, and ready for emissions calculations automatically at no extra cost.

✔ Scope 2 emissions accounting

Including renewable energy adjustments, market and location-based calculations.

✔ GreenPower, PPA and solar reporting

Helping businesses demonstrate clear renewable contributions.

✔ Bill and tariff verification

Ensuring data accuracy before it reaches your sustainability report.

✔ Portfolio-wide data for multi-site organisations

Aligned, centralised energy records across all locations.

✔ Transition planning support

Termina helps build and model decarbonisation pathways using:

• Solar feasibility
  
• PPAs
  
• GreenPower strategies
  
• Electrification options
  
• Demand optimisation
  

✔ Scenario analysis inputs

Energy cost and consumption forecasts for climate resilience modelling.

AASB S2 will require businesses to justify their targets and strategies, Termina provides the technical foundations to make those commitments credible.
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The Bottom Line

AASB S2 is not just another compliance requirement, it represents a major shift in how businesses must understand and manage climate, risk, and energy. It moves sustainability from the marketing department into the core of financial reporting and governance.

With accurate energy data, renewable strategies, procurement insights, and scenario modelling, Termina helps Australian businesses get ahead of these requirements, turning compliance into a competitive advantage.