Australian companies must prepare for mandatory climate disclosure. These Australian Sustainability Reporting Standards are based on the International Sustainability Standards Board’s IFRS S1 and S2. Disclosure is proposed for both profit and not-for-profit entities.
These standards represent a major shift in the prominence of sustainability reporting. We’ve highlighted why they’re important, and implications for both ESG and existing financial reporting.
Here we review practical steps your finance and leadership team need to consider. Starting with Governance, we’ll provide an overview of the four categories that you’ll need to disclose:
These will introduce priorities and important points for each category, but we encourage you to read the full list for S1 and S2 yourself.
You will need to report details on your business organisation, and how you’re prioritising and delegating climate tasks.
Critically you need to articulate the board’s oversight of climate risks & opportunities (yes, there are opportunities) and describe management’s role in assessing & managing these.
This includes:
While Australian companies will need to prioritise S2 (climate) disclosures, there are few requirements for one that are not found in the other. Once you’ve defined how your governance team operates for one standard, it’s conceivable this will also be relevant for S1.
The aim of disclosing your governance is to ensure that your organisation’s approach to a sustainable transformation is well informed, consistent, and being taken seriously.
You’ll need a very detailed plan for climate action going forward, and a team with key competencies and resources allocated to the problem.
Members of the governance team must be familiar with risks and opportunities, as well as targets and metrics regarding sustainability.
It’s one reason you need to ensure that those competencies exist within your organisation, and find your climate champions early - they’ll likely form the core of your governance team.
Building capability could include training, experienced hires, external support and tools and platforms. To learn more, get in touch with the Getting to Zero team.
Next up: the other disclosure components: Strategy, Risks, Targets & Metrics.
1. Why do Australian companies need to prepare for mandatory climate disclosure? Australian Sustainability Reporting Standards, based on the International Sustainability Standards Board’s IFRS S1 and S2, mandate climate disclosure for both profit and not-for-profit entities. This represents a significant shift in the importance of sustainability reporting.
2. What are the key categories for disclosure under the new standards? Under the new standards, companies need to disclose information related to Governance, Strategy, Risks Management, and Targets & Metrics.
3. What does Governance disclosure entail? Governance disclosure involves reporting details on business organisation, prioritisation and delegation of climate tasks, board oversight of climate risks & opportunities, and management’s role in assessing & managing these aspects.
4. Why is disclosing Governance important? Disclosing Governance ensures that an organisation's approach to sustainable transformation is well-informed, consistent, and taken seriously. It requires a detailed plan for climate action, competent team members, and resources allocated to the problem.
5. How can companies build capability for effective climate governance? Building capability may involve training, hiring experienced professionals, seeking external support, and utilising tools and platforms. Identifying climate champions early can form the core of the governance team.
For more detailed insights and assistance in navigating climate disclosure requirements, reach out to the Getting to Zero team.
