AASB S2 readiness: what your FY26 annual report must disclose
The first mandatory climate disclosure cycle has landed. Here is what AASB S2 means for your FY26 annual report, page by page.
AASB S2 Climate-related Disclosures is now mandatory for Australia's largest reporting entities, with smaller groups phasing in across FY26 and FY27. For most boards this is the first time climate sits inside the audited annual report rather than a separate sustainability publication.
Who has to comply, and when
Group 1 entities (consolidated revenue above 500 million dollars) report from periods starting 1 January 2025. Group 2 (above 200 million) follows the year after. Group 3 (above 50 million, with two of the three NGER, employee or asset thresholds met) starts 1 January 2027. Charities registered with the ACNC are out of scope unless they meet the thresholds through related entities.
What changes inside the annual report
- Governance disclosure of board and management oversight of climate risk, with named committees.
- Strategy section covering identified climate-related risks and opportunities, time horizons, and the resilience of the business model.
- Risk management process integrated with the entity's enterprise risk framework.
- Metrics and targets, including Scope 1, Scope 2 and material Scope 3 greenhouse gas emissions, plus any internal carbon price.
Design implications
Climate disclosures need to live where the audited financials live. That means consistent footnote style, base-year notes on every chart, and assurance status flagged on the page rather than buried in an appendix. We design with assurance providers in the room from week two so the data on the page reconciles back to the trial balance and the GHG inventory at the same time.
How we structure an AASB S2 ready report
- Disclosure matrix mapped to AASB S2 paragraphs in week one.
- Climate spreads designed against the same grid as the financial review.
- Assurance status, base year and methodology notes on every chart.
- Accessibility tagging that keeps long methodology tables screen-reader friendly.
If you want the disclosure matrix template, email the studio. We share it under NDA with boards preparing their first cycle.
Quick answers
Does AASB S2 apply to ASX listed companies under 500 million in revenue?
Not in the first reporting period. Group 2 picks up entities above 200 million in consolidated revenue from periods starting 1 January 2026. Group 3 catches the rest above 50 million from 1 January 2027.
Can climate disclosures stay in a separate sustainability report?
No. The disclosures sit inside the annual report or in another financial report lodged at the same time. A standalone sustainability publication can repeat the content but cannot replace it.