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Guide 4 of 5 · Climate statements

What a climate statement contains: AASB S2 and the Act’s protection for early reports

The climate statements in a sustainability report follow AASB S2 Climate-related Disclosures, which asks for information under four headings: governance, strategy, risk management, and metrics and targets, with greenhouse gas emissions reported as scope 1, scope 2 and scope 3. In its first year under the standard an entity need not disclose scope 3, and for reports for financial years starting in the three years from 1 January 2025, s 1707D of the Corporations Act bars actions over statements about scope 3, scenario analysis and transition plans, other than criminal proceedings and actions brought by ASIC.

General information only, not legal or accounting advice. The standard is the Australian Accounting Standards Board’s; the official place to check how the reporting rules are administered is ASIC.

Four headings

AASB S2 (F2024L01472) applies to annual reporting periods beginning on or after 1 January 2025. Its text is IFRS Foundation copyright, so this is a plain-words summary, not the standard; read it in full on the Register. The standard does not reach climate matters that could not reasonably be expected to affect an entity’s prospects (para 4). Within that, its core content is in four parts:

  • Governance

    Paragraphs 5 to 7Who oversees climate risks and opportunities (a board, committee or person) and how: mandate, skills, how often they are told, how they weigh these risks in strategy and major deals, and how targets are set and tracked. Then management’s part and its controls.

  • Strategy

    Paragraphs 8 to 23The climate risks and opportunities that could reasonably be expected to affect its prospects, as physical or transition risks, over the short, medium and long term; their effects on the business model and value chain; the response, including any transition plan; the financial effects, now and expected; and the strategy’s resilience, tested with scenario analysis.

  • Risk management

    Paragraphs 24 to 26How the entity finds, weighs, ranks and watches climate risks and opportunities, whether scenario analysis feeds in, and how this fits its overall risk management.

  • Metrics and targets

    Paragraphs 27 to 37Seven cross-industry metric categories (below), and the targets the entity has set or must meet by law, with, among other things, the metric, the period, the base period, any milestones and the progress made for each.

The seven metric categories

Paragraph 29 lists them, and this is the whole list:

  1. Greenhouse gases. Absolute gross emissions for the period, in metric tonnes of CO2 equivalent, split into scope 1, scope 2 and scope 3, with the measurement approach explained.
  2. Transition risks. How much of the entity’s assets or business activities is vulnerable to them, as an amount and a percentage.
  3. Physical risks. The same measure, for physical risks.
  4. Opportunities. How much is aligned with climate-related opportunities, as an amount and a percentage.
  5. Capital deployment. Capital expenditure, financing or investment put towards climate risks and opportunities.
  6. Internal carbon prices. Whether and how the entity uses a carbon price in its decisions, and the price per tonne it uses.
  7. Remuneration. Whether climate matters feed into executive pay, and the share of executive pay for the period linked to them.

Emissions are measured under the Greenhouse Gas Protocol corporate standard of 2004 unless a jurisdictional authority, or an exchange where the entity is listed, requires another method. Scope 2 is given on a location basis, with any information on contractual instruments needed to understand it. Scope 3 names the categories included, using the Greenhouse Gas Protocol’s value chain standard of 2011, and an entity in asset management, commercial banking or insurance adds information on its financed emissions. Scope 1 and scope 2 also have their own meanings under the NGER Regulations, for NGER reporting.

The first year under the standard

Appendix C eases the first annual reporting period in which an entity applies AASB S2. No comparative figures are needed for it (para C3). The entity may use either or both of two reliefs (para C4):

  • if it measured its emissions in the year before by a method other than the 2004 Greenhouse Gas Protocol standard, it may keep using that method;
  • it need not disclose its scope 3 emissions, and for an entity in asset management, commercial banking or insurance, that includes the extra information on financed emissions.

Either relief may carry into the comparative figures of later years (para C5). So in its first year under the standard, an entity need not disclose scope 3 at all.

An amending standard, AASB S2025-1, applies from annual reporting periods that begin on or after 1 January 2027, and may be applied earlier. Among other changes, it lets an entity limit what it counts in scope 3 Category 15 emissions to its financed emissions.

Protection for early reports: s 1707D

The Corporations Act gives some statements in the first reports a limited immunity. Its core is s 1707D(1) and (2):

“(1) No action, suit or proceeding lies against a person in relation to: (a) a protected statement; or (b) a statement that is required to be made under a Commonwealth law and: (i) is the same as a protected statement; or (ii) differs from a protected statement only in so far as it contains updates or corrections to the protected statement.”

“(2) Subsection (1) does not apply to an action, suit or proceeding if it is any of the following: (a) criminal in nature; (b) brought by ASIC.”

Corporations Act 2001, s 1707D, compilation of 19 September 2026

Which statements are protected depends on the financial year the report is for. The start date is 1 January 2025 (s 1707).

  1. Years starting in 2025Scope 3, scenario analysis, transition plans, and statements relating to climate that are about the future when made (s 1707D(3), (4))
  2. Years starting in 2026 and 2027Scope 3 (including financed emissions), scenario analysis and transition plans (s 1707D(3))
  3. Years starting from 2028No protection under s 1707D

The statement must be in a sustainability report, made to comply with a sustainability standard, or in the auditor’s report on it. The last protected financial year is one starting on or before 31 December 2027.

The directors’ declaration and voluntary reports

For the same 3 years, s 1707C changes what the directors declare: whether, in their opinion, the entity “has taken reasonable steps to ensure” the substantive provisions of the sustainability report are in accordance with the Act. Under s 1707DA, an entity not required to prepare a sustainability report for a year in those 3 years that prepares one anyway, with a dated declaration by resolution of its directors, signed by a director, that the section is to apply, is treated as if it were required to for ss 296E (ASIC directions), 301A (audit) and 1707D. The section covers a company, registered scheme, registrable superannuation entity or disclosing entity.

Around the statement

AASB S2 refers to an entity electing to apply AASB S1 voluntarily, to disclose other sustainability-related risks and opportunities beside the climate ones. When a sustainability report is audited, s 307C of the Corporations Act requires the individual auditor, or the lead auditor of an audit firm or company, to give the directors a written independence declaration, set out in volume 2 of the Act. Whether a statement is needed at all is in the guide to who must prepare a sustainability report; carbon credits, which a net target may rely on (para 36(e)), are in the guide to Australian carbon credit units.