AASB S2 Climate-related Disclosures

Present fairly all climate related risks and opportunities that could reasonably be expected to affect prospects in a complete set of climate related financial disclosures.

• Completeness assessment covering all identified risks and opportunities
• Disclosure sign off by the preparer and reviewer

• Material risks identified internally but not disclosed
• No completeness assessment on file

Apply the identification guidance in paragraphs B8 to B10 when identifying climate related risks and opportunities that could reasonably be expected to affect prospects.

• Identification working paper citing the application guidance
• Record of sources considered including industry and value chain sources

• Identification method not documented
• Guidance paragraphs not applied or referenced

Disclose material information about the climate related risks and opportunities that could reasonably be expected to affect prospects.

• Materiality assessment for climate information
• Materiality thresholds and rationale
• Sign off on materiality conclusions

• Materiality assessment absent or purely financial
• Thresholds undocumented
• Material items aggregated so their effect is obscured

Apply the materiality guidance in paragraphs B13 to B19 and B21 to B37 when identifying and disclosing material information.

• Materiality working paper citing the application guidance
• Record of judgements on aggregation and disaggregation

• Materiality applied without reference to the guidance
• Aggregation judgements undocumented

Provide information in a manner that enables users to understand the connections between the items disclosed and between the climate related financial disclosures and the related financial statements and other reports.

• Connectivity map linking climate disclosures to financial statement line items
• Consistency check between narrative disclosures and metrics
• Cross reference table across published reports

• Climate disclosures presented in isolation from the financial statements
• Inconsistent figures between reports
• No connectivity analysis

Identify the financial statements to which the climate related financial disclosures relate.

• Explicit statement identifying the related financial statements
• Report front matter naming the financial report and period

• Related financial statements not identified
• Ambiguity where multiple financial reports exist

Use data and assumptions in preparing the climate related financial disclosures that are consistent, so far as possible under Australian Accounting Standards, with those used in preparing the related financial statements.

• Assumption reconciliation between climate disclosures and the financial statements
• Explanation of any permitted differences
• Shared assumption register

• Different discount rates or price assumptions with no explanation
• No reconciliation performed
• Assumptions held only by the sustainability team

Where currency is specified as the unit of measure, use the presentation currency of the related financial statements.

• Statement of presentation currency in the disclosures
• Check that monetary amounts match the financial statement currency

• Amounts presented in a different currency from the financial statements
• Currency not stated

Where a metric is taken from a source other than Australian Sustainability Reporting Standards, identify the source and the metric taken.

• Metric source register naming each external source
• Citation of the source in the disclosure

• External metrics used without naming the source
• Source cited generically rather than by standard and version

Where a metric has been developed by the entity, disclose how it is defined, whether it is absolute, relative or qualitative, whether it is validated by a third party and by whom, and the method and inputs used to calculate it.

• Metric definition sheet including calculation method and inputs
• Third party validation report where obtained
• Record of any adjustment made to an externally sourced metric

• Entity developed metric disclosed without a definition
• Validation status not stated
• Calculation inputs and assumptions not disclosed

Keep the definition and calculation of metrics, including metrics used for targets, consistent over time, and apply the restatement guidance where a metric is redefined or replaced.

• Metric change log covering definition changes
• Restated comparatives where a metric was redefined
• Explanation of the reason for the change

• Metric redefined without restating comparatives
• Change not explained
• No metric change log

Label and define metrics and targets using meaningful, clear and precise names and descriptions.

• Glossary of metric and target names and definitions
• Review evidence that labels are not misleading

• Metric names ambiguous or inconsistent between sections
• No definitions provided
• Labels imply a scope wider than the metric covers

Where information required by the Standard is disclosed in the same location as other information, ensure the climate related financial disclosures remain clearly identifiable and are not obscured.

• Report structure showing where the climate disclosures sit
• Navigation aid or index identifying the required disclosures
• Review confirming the disclosures are not obscured

• Required disclosures buried within broader sustainability narrative
• No index identifying which content is the AASB S2 disclosure

Where information is included by cross reference to another report, apply the cross reference requirements so that the information is available on the same terms and at the same time as the disclosures.

• Cross reference index naming each report and location
• Evidence that the cross referenced report is available on the same terms and at the same time
• Assessment that the disclosures remain understandable

• Cross reference to a report published later or on different terms
• Cross references so extensive the disclosures are not understandable
• Location within the other report not precise

Report the climate related financial disclosures at the same time as the related financial statements and for the same reporting period.

• Publication dates of the sustainability report and the financial report
• Board approval dates for both
• Statement of the reporting period covered

• Climate disclosures published after the financial statements
• Different reporting period covered
• Approval dates inconsistent

Where the reporting period end changes and disclosures cover a period longer or shorter than twelve months, disclose the period covered, the reason for it, and that the amounts are not entirely comparable.

• Disclosure of the changed period and the reason
• Comparability statement
• Board minute approving the change of reporting date

• Period change made without disclosing the reason
• Comparability caveat omitted

Where information about conditions that existed at the reporting date is received before the disclosures are authorised for issue, update the disclosures that relate to those conditions.

• Post reporting date review procedure covering climate information
• Log of information received after period end and the resulting updates
• Authorisation for issue date record

• No post reporting date review for climate information
• Late information received but disclosures not updated
• Authorisation date not recorded

Disclose information about transactions, events and conditions occurring after the reporting date but before authorisation for issue where non disclosure could reasonably be expected to influence users decisions.

• Subsequent events register covering climate matters
• Assessment of influence on users decisions
• Disclosure of the nature and estimated effect

• Subsequent events review limited to financial matters
• Material post period climate events not disclosed
• No assessment of user relevance

Where interim climate related financial disclosures are required or elected, prepare them in accordance with the Standard.

• Interim disclosure basis of preparation
• Evidence of the requirement or election to publish interim disclosures

• Interim disclosures published on a different basis from the annual disclosures
• Basis of preparation not stated

Disclose comparative information for the preceding period for all amounts disclosed, and for narrative and descriptive information where that would be useful, and restate comparatives where required.

• Comparative columns for every quantitative disclosure
• Restatement working papers where estimates changed
• Explanation of any comparative not restated

• Comparatives omitted for newly introduced metrics without explanation
• Restatements made without disclosure
• Narrative comparatives never considered

Where the disclosures comply with all requirements of the Standard, make an explicit and unreserved statement of compliance, and do not describe the disclosures as compliant otherwise.

• Explicit and unreserved compliance statement in the report
• Compliance checklist against every requirement supporting the statement
• Board or committee approval of the statement

• Qualified or partial compliance language used alongside a compliance claim
• Compliance stated without a supporting checklist
• Statement omitted although full compliance achieved

Disclose the judgements, other than those involving estimations, made in preparing the disclosures that have the most significant effect on the information disclosed.

• Judgement register with the significance assessment for each judgement
• Narrative disclosure of the most significant judgements
• Reviewer sign off on the judgement register

• Judgements made but not disclosed
• No significance ranking of judgements
• Judgement register held informally

Disclose information enabling users to understand the most significant uncertainties affecting the amounts reported in the climate related financial disclosures.

• Measurement uncertainty analysis
• Narrative disclosure of the most significant uncertainties

• Uncertainty acknowledged generically without identifying the significant sources
• No analysis retained

Identify the amounts disclosed that are subject to a high level of measurement uncertainty and, for each, disclose the sources of that uncertainty and the assumptions, approximations and judgements made in measuring it.

• Schedule of amounts subject to high measurement uncertainty
• Source of uncertainty documentation for each amount
• Assumption and approximation register

• High uncertainty amounts not separately identified
• Sources of uncertainty described only in general terms
• Sensitivity or range information omitted

Correct material prior period errors by restating the comparative amounts for the prior periods disclosed unless it is impracticable to do so.

• Error register with materiality assessment
• Restated comparatives and the restatement working papers
• Impracticability assessment where restatement was not made

• Errors corrected prospectively without restatement
• Impracticability asserted without support
• No error register

Where a material error in prior period climate related financial disclosures is identified, apply the prior period error guidance in paragraphs B55 to B59.

• Working paper citing the error correction guidance
• Disclosure of the nature of the error and the amount of each correction

• Error corrected without applying or citing the guidance
• Nature and amount of the correction not disclosed

Prepare the climate related financial disclosures for the same reporting entity as the related financial statements unless otherwise permitted by law.

• Statement of the reporting entity in the disclosures
• Reconciliation to the reporting entity of the financial statements
• Legal basis where a different entity is used

• Disclosures prepared for a different entity without a stated legal basis
• Reporting entity not identified
• Consolidation boundary differs from the financial statements without explanation

Disclose the body or individual responsible for climate oversight and the role of management in the processes, controls and procedures used to monitor and manage climate related risks and opportunities.

• Board or committee charter clauses assigning climate oversight
• Terms of reference or role description naming the responsible body
• Board skills and competency assessment for climate oversight
• Minutes evidencing frequency of climate reporting to the body
• Delegation instrument to the management position or committee

• No named body or individual with climate oversight
• Skills and competency assessment absent
• Oversight of target setting and remuneration linkage not described
• Management delegation undocumented

Prepare the governance disclosures so that integrated disclosure is used instead of separate disclosure for each risk and opportunity where oversight is managed on an integrated basis.

• Disclosure drafting policy covering integration
• Mapping showing which governance disclosures are integrated
• Reviewer sign off on duplication check

• Governance narrative repeated for each risk
• No documented duplication review
• Integration asserted but not evidenced

Disclose information relevant to the cross industry metric categories and the targets set by the entity or required by law or regulation, and progress towards them.

• Metrics and targets section of the report
• Index mapping each required item to its disclosure location

• Targets required by law or regulation omitted
• Cross industry metric categories partially covered

Disclose the seven cross industry metric categories: greenhouse gas emissions with Scope 1, Scope 2 and Scope 3 measured under the Greenhouse Gas Protocol and disaggregated as required, transition risk exposure, physical risk exposure, climate related opportunities, capital deployment, internal carbon prices, and remuneration linkage.

• Greenhouse gas inventory with Scope 1, Scope 2 and Scope 3 by category
• Measurement approach, inputs and assumptions documentation
• Location based Scope 2 calculation and contractual instrument information
• Disaggregation between the consolidated accounting group and other investees
• Schedules of assets and activities vulnerable to transition and physical risk and aligned with opportunities
• Capital expenditure, financing and investment allocation schedule
• Internal carbon price policy and the price per tonne applied
• Remuneration policy extract and the percentage of executive remuneration linked to climate

• Scope 3 omitted or limited to a few categories without explanation
• Scope 2 disclosed on a market basis only
• No disaggregation between the accounting group and other investees
• Amount and percentage disclosed for risk exposure but not both
• Internal carbon price mentioned without the price applied
• Remuneration percentage not quantified

Use all reasonable and supportable information available at the reporting date without undue cost or effort when preparing the transition risk, physical risk and opportunity metrics.

• Data source register for the exposure metrics
• Undue cost or effort assessment
• Basis of preparation for asset and activity classification

• Exposure metrics estimated without a documented basis
• Available external data not considered
• No undue cost or effort assessment

When preparing the transition risk, physical risk, opportunity, capital deployment, internal carbon price and remuneration metrics, apply the metric preparation guidance in paragraphs B64 and B65.

• Working paper referencing the application guidance for each metric
• Judgement log for classification of assets and activities

• Application guidance not referenced
• Classification judgements undocumented

Disclose each quantitative and qualitative climate related target set to monitor progress and any target required by law or regulation, including the metric, objective, part of the entity covered, period, base period, milestones and interim targets.

• Target register with metric, objective, scope, base period and target period
• Board approval of each target
• Milestone and interim target schedule
• Evidence of the legal or regulatory source for mandated targets

• Base period or target period not stated
• Part of the entity covered by the target unclear
• Mandated targets not distinguished from voluntary targets

Disclose the approach to setting and reviewing each target and how progress is monitored, including whether the target was validated by a third party, the review process, and the metrics used to monitor progress.

• Target setting and review procedure
• Third party validation report where obtained
• Monitoring metric definitions
• Records of target revisions and the reasons for them

• Review process not described
• Third party validation status not stated
• Revisions to targets not explained

Disclose performance against each climate related target and an analysis of trends or changes in that performance.

• Performance against target schedule for the period
• Trend analysis covering prior periods
• Variance explanations

• Performance reported without trend analysis
• Prior period comparatives absent
• Missed targets not explained

For each greenhouse gas emissions target disclose the gases covered, whether Scope 1, Scope 2 or Scope 3 emissions are covered, whether it is a gross or net target, whether it is science based and how it was validated, and the planned use of carbon credits.

• Greenhouse gas target definition covering gases and scopes
• Gross target disclosure where a net target is used
• Science based validation evidence
• Carbon credit plan including scheme, type of credit and verification arrangements

• Net target disclosed without the corresponding gross target
• Reliance on carbon credits not disclosed
• Science based claim not supported by a validation record
• Gases covered not specified

When identifying and disclosing the metrics used to set and monitor progress towards targets, refer to and consider the applicability of the cross industry metric categories.

• Applicability assessment linking target metrics to the cross industry categories

• Target metrics selected without reference to the metric categories

Disclose the processes and related policies used to identify, assess, prioritise and monitor climate related risks and opportunities, and how those processes are integrated into the overall risk management process.

• Climate risk management procedure
• Risk register with assessment and prioritisation criteria
• Evidence of integration with the enterprise risk management framework
• Record of changes to the processes during the period

• Process described for risks but not for opportunities
• Integration with enterprise risk management asserted only
• Inputs, parameters and data sources not described

Prepare the risk management disclosures so that integrated disclosure is used instead of separate disclosure for each risk and opportunity where the processes are managed on an integrated basis.

• Disclosure drafting policy covering integration
• Duplication review sign off

• Risk management narrative repeated per risk
• No documented duplication review

Describe each climate related risk and opportunity that could reasonably be expected to affect prospects, classify risks as physical or transition, and state the time horizons and how they are defined.

• Climate risk and opportunity register with physical or transition classification
• Definition of short, medium and long term horizons and their link to planning cycles
• Assessment working papers supporting each entry

• Risks listed without physical or transition classification
• Time horizons undefined or inconsistent with strategic planning
• Opportunities omitted

Use all reasonable and supportable information available at the reporting date without undue cost or effort when identifying climate related risks and opportunities.

• Source register for data and evidence used in identification
• Undue cost or effort assessment memo
• Evidence of consideration of value chain and external data sources

• Identification based only on internal data
• No undue cost or effort assessment
• Sources not retained

Disclose current and anticipated effects of climate related risks and opportunities on the business model and value chain, and where in the business model and value chain they are concentrated.

• Value chain map with climate effect annotations
• Business model impact assessment
• Segment or geography level concentration analysis

• Value chain effects described generically
• No concentration analysis
• Upstream and downstream effects omitted

Disclose how climate related risks and opportunities affect strategy and decision making, including any climate related transition plan, targets, and progress against plans disclosed in prior periods.

• Climate transition plan document
• Board approved strategy papers referencing climate
• Prior period plan progress reconciliation
• Assumptions register underlying the transition plan

• Transition plan referenced but not disclosed
• No progress reporting against prior period plans
• Resourcing of the plan not addressed

Disclose the effects of climate related risks and opportunities on financial position, financial performance and cash flows for the period, and their anticipated effects over the short, medium and long term.

• Reconciliation between climate disclosures and the financial statements
• Working papers on carrying amounts at material climate risk
• Financial planning documents showing climate assumptions

• Financial effects described only qualitatively without explanation
• No link to the related financial statements
• Anticipated effects over longer horizons omitted

Disclose quantitative and qualitative information on how climate related risks and opportunities have affected and are expected to affect financial position, performance and cash flows, including amounts at material risk of adjustment.

• Schedule of assets and liabilities subject to material climate risk
• Quantitative sensitivity or exposure tables
• Basis of preparation note for the amounts disclosed

• Quantitative information omitted with no reliance on the relief criteria
• Amounts not tied to the financial statements
• Cash flow effects not addressed

When preparing anticipated financial effect disclosures use all reasonable and supportable information available without undue cost or effort and an approach commensurate with the skills, capabilities and resources available.

• Methodology memo for anticipated financial effects
• Skills and resources assessment supporting the approach chosen
• Data source and assumption register

• Approach undocumented
• No consideration of available skills and resources
• Assumptions not retained for audit

Where quantitative financial effect information is not provided, explain why, give qualitative information about the effects, and give quantitative information about the combined effects with other risk factors unless impracticable.

• Documented assessment against the relief criteria in paragraphs 19 and 20
• Qualitative effect narrative
• Combined effect quantitative disclosure or an impracticability assessment

• Relief taken without explanation
• No qualitative substitute disclosure
• Impracticability asserted without support

Disclose an assessment of the climate resilience of strategy and business model using climate related scenario analysis, including the method used, the scenarios and inputs, and the time horizon applied.

• Scenario analysis report with scenario definitions and sources
• Method and input documentation including which scenarios were used and why
• Board or management review of the resilience conclusion
• Record of the reporting period in which the analysis was carried out

• Scenario analysis performed but method and inputs not disclosed
• Only a single scenario used without explanation
• Resilience conclusion asserted without supporting analysis

Disclose information covering the identified risks and opportunities, their effects on business model and value chain, strategy and decision making, financial position and performance, and climate resilience.

• Strategy section of the sustainability report
• Cross reference index from paragraph 9 items to disclosure locations
• Working paper mapping each required element to its source

• One or more of the five strategy elements omitted
• No traceability from requirement to disclosure
• Transition plan element missing

When preparing the strategy disclosures refer to and consider the applicability of the cross industry metric categories described in paragraph 29.

• Applicability assessment against each cross industry metric category
• Working paper linking strategy disclosures to the metric categories

• No documented consideration of the metric categories
• Applicability assessment performed only for metrics and targets disclosures