Objective
AASB S2 Climate-related Disclosures requires entities to provide climate-related financial information that is useful to primary users of general purpose financial reports. The Standard focuses on climate-related 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.

Scope
The Standard applies to climate-related physical risks, transition risks, and climate-related opportunities that may affect an entity’s prospects. Risks and opportunities that are not reasonably expected to affect prospects fall outside scope. Disclosures must be prepared for the same reporting entity as the related financial statements, unless otherwise permitted under the Corporations Act.

Core Content

Governance
Entities must disclose governance processes, controls, and procedures used to monitor and manage climate-related risks and opportunities. This includes identifying the governing body or individuals responsible for oversight, how responsibilities are reflected in mandates and policies, how climate issues are integrated into strategy and major decisions, and how progress against climate-related targets is monitored. Disclosure should also cover whether climate-related performance metrics influence remuneration.

Strategy
Entities are required to disclose climate-related risks and opportunities over the short, medium, and long term, and explain their impact on business models, strategy, and financial planning. This includes describing the resilience of strategy using climate-related scenario analysis, where relevant. Information should address how identified risks and opportunities influence decisions on capital allocation, products, services, and supply chains.

Risk management
Disclosures must explain processes for identifying, assessing, and managing climate-related risks, and how these processes are integrated into overall risk management. Entities should describe how climate risks are prioritised relative to other risks, and whether different processes are used for physical and transition risks. The objective is to enable users to understand how climate considerations are embedded within enterprise risk frameworks.

Metrics and targets
Entities must disclose metrics used to assess climate-related risks and opportunities, including greenhouse gas emissions. This includes Scope 1 and Scope 2 emissions, and Scope 3 emissions where applicable, measured using recognised methodologies, subject to jurisdictional reliefs. Entities are also required to disclose climate-related targets, performance against those targets, and how progress is monitored. The Standard includes requirements for explaining assumptions, methodologies, and significant judgements used in measurement.

General requirements for disclosure of climate-related financial information
Appendix D sets out general principles, including relevance, faithful representation, materiality, and comparability. Disclosures must be neutral, complete, and free from material error. Entities are required to explain uncertainties, significant assumptions, and changes in methods or estimates over time.

Comparison with IFRS S2
AASB S2 is based on IFRS S2, with modifications to reflect the Australian legal and institutional context. Notably, entities applying AASB S2 are not required to apply AASB S1, as AASB S1 is voluntary. Industry-based disclosure requirements included in IFRS S2 have been omitted as an interim measure, with further work planned by the AASB.

Application date
AASB S2 applies to annual reporting periods beginning on or after 1 January 2027, incorporating amendments up to December 2025. Earlier application is permitted in line with Corporations Act phase-in requirements for different classes of entities.