What are the Australian Sustainability Reporting Standards (ASRS)?

The Australian Sustainability Reporting Standards (ASRS) were released in September 2024 with the aim of enhancing transparency and accountability in corporate sustainability practices. Aligned with the IFRS’s global standard ISSB, and based on the TCFD, ASRS will require companies and financial institutions to assess and disclose information about their climate-related risks and opportunities. ASRS also aligns with GRI and SASB.

Requirements

ASRS comprises 2 elements, one voluntary, and the other mandatory.

AASB S1: General Requirements for Disclosure of Sustainability-related Financial Information

• S1 is voluntary and seeks to encourage entities to disclose information about sustainability-related risks and opportunities that could impact their financial performance. It aligns closely with the International Financial Reporting Standards (IFRS) S1

·       The sustainability report for these entities should include:

o   Description of sustainability-related risks and opportunities.

o   Impact of these risks and opportunities on the entity's business model, strategy, and financial performance.

o   Governance processes, controls, and procedures used to monitor and manage these risks and opportunities

AASB S2: Climate-related Disclosures

• S2 is mandatory and requires entities to report on climate-related risks and opportunities. It includes detailed requirements for disclosing the impact of climate change on financial performance, access to finance, and cost of capital. AASB S2 is aligned with IFRS S2

• The sustainability report for these entities must include:

  • Governance: Description of the board's oversight and management's role in assessing and managing climate-related risks and opportunities.

  • Strategy: Impact of climate-related risks and opportunities on the entity's business, strategy, and financial planning.

  • Risk Management: Processes for identifying, assessing, and managing climate-related risks.

  • Metrics and Targets: Metrics used to assess climate-related risks and opportunities, and targets set to manage these risks

Specific requirements

Sustainability report

Entities will be required to produce a ‘Sustainability Report’ alongside their annual financial statements. These must include a directors’ declaration confirming the report complies with the Corporations Act and AASB S2.

Scenario Analysis

Entities must also conduct climate scenario analysis using at least two specified scenarios to assess the potential impact of climate-related risks and opportunities.

Scope 3 emissions reporting

Under S2, entities will be required to report Scope 3 emissions starting from the second reporting period onwards. This approach provides a one-year relief period to help entities prepare.

Assurance

Entities will also be required to have their disclosures independently assured using a newly developed sustainability assurance standard, ASSA 5000. This provides baseline requirements, covering the end-to-end process of a sustainability assurance engagement, from acceptance and continuance to reporting.

Implementation

Implementation will be phased based on entity size and existing emissions reporting requirements under NGER (National Greenhouse and Energy Reporting), Australia’s national framework for companies to report their greenhouse gas emissions, energy production, and energy consumption.

The phased approach is designed to allow entities to gradually adapt to the new reporting requirements, ensuring they have adequate time to implement necessary processes and controls.

If you’d like help implementing ASRS, please get in touch at enquiries@danesmeadadvisory.com