Summary
Details
- Australia
The standards (specifically, the AASB S2) is mandatory for entities required by the Corporations Act to prepare an annual sustainability report.
Any entity may elect to apply AASB S1 and/or AASB S2 voluntarily (but must meet all requirements to state compliance).
Deep dive
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Background
The AASB approved the first ASRS in September 2024 and published AASB S1 and AASB S2 shortly after. AASB S2 supports the Australian Government’s decision to mandate climate-related financial disclosures via amendments to the Corporations Act, with ASIC issuing guidance (RG 280) on how it will administer and interpret the new sustainability reporting requirements. Policy design has been described as “climate first, but not only”, anticipating potential future expansion beyond climate topics—one reason AASB S1 exists even though climate is the first mandatory focus.
What the ASRS ask companies to report
Mirroring the ISSB structure, the standards require disclosure of sustainability-related (AASB S1) and climate-related (AASB S2) risks and opportunities that could reasonably be expected to affect an entity’s cash flows, access to finance, or cost of capital over the short, medium or long term. AASB S2 is explicitly built on and integrates the TCFD architecture (governance, strategy, risk management, metrics and targets) for climate-related financial information and requires reporting as part of general-purpose financial reports on the same reporting period/timing as the financial statements (with defined transition reliefs for first-time reporting in some areas, such as comparatives).
To operationalise these requirements, some organisations use Australian-built reporting platforms that map data capture and narratives to ASRS clauses—e.g., Trellis and Avarni which market software to streamline ASRS/AASB compliance and audit-ready disclosures.
How ASRS differs from ISSB Standards
ASRS are intended to be closely aligned with IFRS S1/S2, but the AASB made a small number of Australia-specific modifications, including:
AASB S1 is voluntary in Australia (with related tweaks to transition relief and Australia-specific paragraphs clarifying its status).
AASB S2 includes an Australia-specific Appendix D, containing general requirements drawn from AASB S1 but limited to climate-related financial information.
Consolidation options are tailored to how Australian legislation requires sustainability reports to be prepared.
The AASB omitted the requirement to consider and disclose industry-based information.
Implementation outlook
Mandatory reporting is phased in across three cohorts: the first cohort reports for financial years commencing on or after 1 January 2025, followed by cohorts commencing on or after 1 July 2026 and 1 July 2027. Scope is set in law: entities must prepare a sustainability report if they meet thresholds under Corporations Act s292A, including a corporate size threshold, an emissions (NGER) threshold, or an assets-under-management/value-of-assets threshold for certain asset owners. Assurance is also being formalised: the AUASB adopted ASSA 5000 (aligned to ISSA 5000) for sustainability assurance engagements from reporting periods beginning on or after 1 January 2025, alongside a staged assurance pathway for mandatory climate information.
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