AASB releases draft standards for climate-related financial disclosure
The AASB has released draft sustainability reporting standards in line with the government’s plans to introduce mandatory reporting on climate-related disclosures.
The Australian Accounting Standards Board has released an Exposure Draft containing three new Australian Sustainability Standards.
BDO partner and national leader, ESG & sustainability, Aletta Boshoff, said the new standards are in response to the Australian government’s commitment to introducing mandatory reporting for climate-related disclosures.
AASB released Exposure Draft ED SR1 Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information last week. ED SR1 is open for consultation until 1 March next year.
Ms Boshoff said ED SR1 includes three draft standards which include:
- ASRS 1 General Requirements for Disclosure of Climate-related Financial Information
- ASRS 2 Climate-related Financial Disclosures
- ASRS 101 References in Australian Sustainability Reporting Standards.
“ASRS 1 uses the equivalent IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information issued by the International Sustainability Standards Board (ISSB) as a baseline, but its scope is limited to climate-related financial disclosure,” said Ms Boshoff.
“ASRS 2 uses the equivalent IFRS S2 Climate-related Disclosures as a baseline. To be updated periodically, ASRS 101 is a service standard that lists the relevant versions of any non-legislative versions of non-legislative documents published in Australia, as well as any foreign documents referenced in ASRS Standards.”
Ms Boshoff said the AASB has decided to address climate-related financial disclosures first, leaving other sustainability-related financial reporting for later.
“This is because at this stage the Australian Government is only proposing mandatory reporting for climate-related disclosures,” she said.
“In order to achieve its objective, the AASB therefore had to limit the scope of any equivalent standard of IFRS S1 to climate-only matters.”
By limiting ASRS 1 to only climate-related financial disclosures, Ms Boshoff said there will be a significant ‘double-up’ between ASRS 1 and ASRS 2, in many cases, requiring the same disclosures in both standards.
“The AASB is therefore seeking comment on the best way to deal with this duplication,” she said.
Entities that will be required by the Corporations Act 2001 to prepare climate-related financial disclosures must undertake climate resilience assessments against at least two possible future states. One of these future states must be consistent with the most ambitious global temperature goal set out in the Climate Change Act 2022.
Entities will also need to disclose their market-based Scope 2 GHG emissions, with transitional relief for the first three annual reporting periods in which the entity applies ASRS 2.
The scope of ASRS 2 is limited to climate-related risks and opportunities related to climate change.
“ASRS 2 does not apply to other climate-related emissions (e.g. ozone-depleting emissions) that are not greenhouse gas (GHG) emissions,” Ms Boshoff clarified.
“Greenhouse gases must be converted into a CO2 equivalent value using the global warming potential values from the same Intergovernmental Panel on Climate Change assessment report as that applying under the Paris Agreement and the National Greenhouse and Energy Reporting Act 2007 and related regulations (NGER scheme legislation).”
Ms Boshoff said the effective date of the ASRS Standards depends on the government’s final timeline for making climate-related financial disclosures mandatory in Australia.
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