AASB S2 Reporting Starts 1 July 2026: Is Your Organisation Ready?

For some Australian organisations, 1st July 2026 marks the beginning of a new reporting obligation under Australia’s mandatory climate disclosure regime. 

If your organisation falls within the Group 2 reporting cohort, preparation cannot wait until the end of the financial year. The information needed for AASB S2 disclosures must be captured, governed and managed from the first day of the reporting period. 

Many organisations already collect some form of sustainability data and may have previously reported against frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD). However, mandatory climate reporting introduces a new level of scrutiny, consistency and accountability. 

The question many organisations are now asking is simple: Are our current systems, processes and governance arrangements capable of supporting AASB S2 reporting requirements? 

What is AASB S2? 

AASB S2 Climate-related Disclosures is Australia’s mandatory climate reporting standard, applicable to large Australian entities and financial institutions that meet legislative thresholds, with phased reporting requirements that started in 2025. It requires organisations to disclose climate-related risks and opportunities (CRROs) that could reasonably be expected to affect their financial position, financial performance, cash flows or long-term prospects. 

The standard forms part of the Australian Sustainability Reporting (ASR) framework and is closely aligned with the International Sustainability Standards Board (ISSB) climate disclosure standard, IFRS S2. 

The aim is to provide investors, regulators and other stakeholders with clear, consistent and comparable information about how climate-related matters may affect an organisation’s future performance. 

Under AASB S2, organisations must report across four core pillars:

1. Governance
2. Strategy
3. Risk Management
4. Metrics and Targets

Together, these pillars are intended to show what climate-related risks exist, and explain how they are identified, managed and incorporated into business decision-making. 

Who Needs to Report from 1 July 2026? 

The next phase of Australia’s mandatory climate reporting regime applies to Group 2 entities. Organisations are generally captured if they meet at least two of the following thresholds: 

• Revenue greater than $200 million 

• Consolidated gross assets greater than $500 million 

• More than 250 employees 

The requirements also apply to certain National Greenhouse and Energy Reporting (NGER) entities and asset owners with more than $5 billion under management. 

For organisations entering on 1 July 2026, climate-related information, governance activities and supporting evidence should be captured from day one. 

Why Waiting Until Next Year is Too Late 

One of the biggest misconceptions about AASB S2 is that organisations can prepare their disclosures at the end of the reporting period. In practice, many of the inputs required under AASB S2 rely on processes, decisions and data that must be established and maintained throughout the year. For example: 

• Governance activities need to be clearly defined and embedded in the organisation. 

• Climate-related risks should be integrated into existing risk management processes. 

• Emissions data must be collected consistently and supported by appropriate controls. 

• Assumptions used in climate assessments and scenario analysis should be documented and traceable. 

• Financial impacts and climate-related considerations need to be reflected in business planning and decision-making processes. 

The challenge is not simply producing a report. The challenge is demonstrating that the information disclosed is reliable, supportable and aligned with how the organisation actually manages climate-related risks and opportunities.   

Organisations that delay preparation may later discover gaps in data, governance records or supporting evidence that are difficult to address in the remaining available time before disclosure. 

Common Readiness Gaps 

For many organisations, particularly Group 2 entities, AASB S2 represents a step change from their current sustainability reporting practices. Many organisations fall into one of three broad categories: 

1. Early-stage (Basic) 

These organisations may have undertaken some sustainability initiatives but have limited formal climate reporting processes. 

Common characteristics include: 

• Primarily narrative sustainability reporting 

• Limited emissions data 

• Informal governance arrangements 

• Minimal connection between climate risks and business planning 

2. Developing (Emerging) 

Organisations that have already taken meaningful steps and may have experience reporting against TCFD or similar frameworks. There may be gaps around financial impacts, documentation and assurance readiness. Typical indicators include: 

• Scope 1 and Scope 2 emissions reporting 

• Some governance oversight 

• Climate risks may be identified but not fully integrated 

• Early-stage scenario analysis 

3. Near-ready (Compliant) 

• Structured disclosures across all AASB S2 pillars 

• Scope 1–3 emissions reported 

• Scenario analysis performed 

• Some linkage to financial impacts and decision making 

Even in this category, organisations may face challenges in demonstrating audit-ready, defensible disclosures. 

Five Actions to Take Before 1 July 

The good news is that organisations do not need to solve everything at once. A structured approach focused on priority areas can significantly improve reporting readiness.  

1. Determine Whether You Are in Scope 

Review the reporting thresholds and assess whether your organisation falls within the Group 2 requirements. Understanding your reporting obligations early allows sufficient time to prepare. 

2. Conduct a Gap Assessment

Assess your current reporting capability against AASB S2 requirements. 

This provides a clear understanding of: 

• Existing strengths 

• Compliance gaps 

• Priority actions 

• Resource requirements 

3. Strengthen Governance

Many organisations have sustainability responsibilities distributed across multiple functions. Ensure clear board oversight and management accountability for climate-related disclosures. This includes defining roles and responsibilities across the Board, executive leadership and operational teams. 

4. Build Internal Capability

Provide training for directors, executives and reporting teams to understand their responsibilities under the new regime. Building understanding across the organisation helps create a more effective reporting process. 

5. Set Up Data Collection Processes 

Required information is often spread across different teams, span multiple functions and/or systems. Identify where critical climate-related information currently resides and determine how it will be collected, validated and maintained. 

For data gathering outside of the organisation, find Scope 3 emissions one of the most complex areas with challenges often including: 

• Data availability 

• Supplier engagement 

• Calculation methodologies 

• Assumptions and documentation 

Establishing clear ownership for data and quality controls early can reduce significant reporting challenges later. 

6. Understand Financial Integration

One of the most significant shifts under AASB S2 is the expectation that climate-related matters are considered within broader business and financial decision-making. 

Many organisations are still developing approaches to assess and communicate how CRROs may influence: 

• Revenue 

• Operating costs 

• Asset values 

• Capital allocation 

• Strategic investment decisions 

The Organisations That Start Now Will Be Better Positioned

For many Group 2 entities, the next twelve months will test their climate reporting capability. However, the organisations that make the strongest progress are not necessarily those with large sustainability teams. They are the organisations taking practical steps now to understand requirements, identify gaps and establish the foundations needed for reliable reporting. 

Those foundations include governance, data quality, accountability, documentation and cross-functional collaboration. The earlier these elements are established, the easier the reporting process becomes. 

Next Steps

With the 2026 reporting period beginning on 1 July for many organisations, now is the time to assess readiness and address any critical gaps. 

Intertek SAI Global supports organisations at all steps of the disclosure process. We provide training, gap assessment and reporting roadmap, governance reviews, greenhouse gas verification, assurance services and broader sustainability advisory support.