Australia’s mandatory climate reporting requirements are here

This article was contributed by Losee Consulting.

How sustainability consultants can help you navigate AASB S2

Australia’s new mandatory climate reporting requirements are landing.

With the introduction of climate-related disclosures under AASB S2 by the Australian Accounting Standards Board, organisations are now moving from voluntary sustainability reporting into a more structured, financial-grade framework.

Climate disclosure is new territory for most businesses, and the standard is comprehensive. Early lessons from Australia’s first mandatory climate reporters show that climate reporting is far more than a compliance exercise. Even organisations with mature sustainability programs and long-standing experience under the National Greenhouse and Energy Reporting (NGER) scheme are encountering challenges around Scope 3 emissions, supply chain data, governance, and financial-grade reporting systems.

The organisations that handle this well will be those that treat mandatory climate reporting as an opportunity to better understand and manage their climate exposure, not just meet regulatory requirements.

At Losee Consulting, we support organisations to navigate AASB S2 by translating evolving climate disclosure requirements into practical, business-ready systems that support both compliance and long-term resilience.

Australia’s mandatory climate reporting is more complex than it looks

Mandatory climate reporting in Australia is often underestimated at the outset.

On paper, the requirements are clear. In practice, they require coordination across sustainability, finance, procurement, risk, and leadership teams. Many organisations find that while they already hold relevant data, it is not structured in a way that meets disclosure standards or holds up under scrutiny.

Scope 3 emissions are a consistent pressure point. Supply chain data is often incomplete or difficult to verify. Governance structures may not yet reflect the level of oversight required. Financial alignment introduces another layer of complexity, particularly where climate risks must be integrated into broader business strategy and reporting.

These challenges are not a reflection of inaction. They highlight the shift from sustainability as a function to climate reporting as a business-wide capability.

From compliance exercise to strategic function

AASB S2 requires organisations to disclose climate-related information across four pillars: governance, strategy, risk management, and metrics and targets.

What is changing is not just what needs to be reported, but how deeply climate considerations must be embedded into the organisation.

Governance is a clear example. This is not a technical requirement that can be solved in isolation. It requires evidence of board-level oversight, defined accountability, and integration into decision-making processes. For many organisations, this is where the gap between intention and implementation becomes visible.

Strategy and risk management follow a similar pattern. Businesses are expected to identify both physical risks, such as extreme weather or supply chain disruption, and transition risks, including regulatory change and market expectations. Beyond identifying these risks, organisations must demonstrate how they influence strategic decisions, investment planning, and resource allocation.

This is where climate reporting begins to intersect directly with commercial performance.

Building the foundations: data, systems and analysis

Accurate emissions data sits at the centre of mandatory climate reporting.

Developing a reliable greenhouse gas inventory across Scope 1, Scope 2 and Scope 3 emissions requires more than a one-off calculation. It involves establishing reporting boundaries, aligning with recognised frameworks such as the GHG Protocol, and building processes that can be repeated and verified over time.

For most organisations, Scope 1 and 2 emissions are relatively manageable. Scope 3 introduces significantly more complexity, extending into supplier engagement, data quality, and assumptions that must be defensible.

Early reporting insights have reinforced that this is one of the most significant capability gaps for Australian businesses.

Alongside emissions data, climate scenario analysis is becoming a critical component of disclosure. AASB S2 requires organisations to assess how different climate futures, including a 1.5°C pathway and higher warming scenarios, could impact business performance.

This is not a theoretical exercise. It requires organisations to stress-test their business model, identify vulnerabilities, and demonstrate how they would respond under different conditions.

The role of sustainability consultants in AASB S2 readiness

Navigating mandatory climate reporting often requires translating complex regulatory requirements into practical actions.

Sustainability consultants play a role in bridging this gap. This includes supporting climate risk and materiality assessments, building carbon accounting systems, and developing governance and reporting frameworks that align with AASB S2 expectations.

At Losee Consulting, this work is grounded in helping organisations move beyond fragmented sustainability activity and towards integrated, reliable reporting processes.

Rather than treating climate reporting as a standalone project, the focus is on embedding it into existing operations so that reporting becomes more efficient, consistent, and scalable over time.

Climate reporting as a long-term capability

Mandatory climate reporting is becoming an expectation not only from regulators, but also from investors, customers, and supply chains.

Organisations that begin building capability early are better positioned to respond. They are able to strengthen internal decision-making, improve transparency, and demonstrate that climate-related risks and opportunities are being actively managed.

The shift is already underway. Climate disclosure is moving from a compliance requirement to a core business function.

Preparing for what comes next

At Losee Consulting, we are already supporting organisations through AASB S2 readiness.

Much of what is now required under mandatory climate reporting builds on capabilities that sustainability teams have been developing for years. What is changing is the level of structure, integration, and scrutiny applied to that work.

Our approach focuses on helping organisations understand where their current efforts already meet the mark, where the gaps are, and how to build systems that support ongoing compliance.

With deadlines approaching, early preparation creates space to build capability properly rather than reacting under pressure.