AASB finalises climate-reporting standards
The board has issued two sets of standards for sustainability reporting after legislation to implement Australia’s climate reporting regime received royal assent.
The Australian Accounting Standards Board (AASB) has now issued its inaugural Australian Sustainability Reporting Standards, the voluntary Standard AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information and the mandatory Standard AASB S2 Climate-related Disclosures.
The release of the standards follows the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 through the Federal Parliament.
AASB S2 Climate-related Disclosures is a mandatory standard that applies under the Corporations Act.
The AASB said it incorporates all requirements of IFRS S2 Climate-related Disclosures with modifications in respect of a few matters.
AASB S2 includes an Australian-specific appendix, for example. The appendix incorporates paragraphs drawn from AASB S1 but expressed in the context of climate-related financial disclosures, so that AASB S2 can function as the standalone mandatory standard containing all the requirements regarding climate-related financial disclosures.
Consistent with the Legislation Act 2003, AASB S2 also specifies the relevant versions of non-legislative Australian documents and foreign documents referenced in the standard, such as the latest international agreement on climate change such as the Paris Agreement, and the Global Industry Classification Standard.
The associated auditing standards for the climate reporting regime are expected to be released by Christmas.
KPMG Australia head of ESG advisory and assurance Adrian King said the standards for climate-related disclosures gives large companies clarity around their legal reporting requirements in relation to climate change.
"We welcome the new standards, which will ultimately help improve transparency," said King.
"Investors, as well as the Australian public, will soon be able to easily understand an entity’s climate strategy and associated financial risks."
King said boards should now be looking at ways their companies can embrace the opportunities climate-related disclosures provide, like bringing sustainability efforts to light, and demonstrating their commitment to Net Zero.
"We now expect the Australian Auditing and Assurance Board to announce assurance standards in the coming months," he said.
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