Background: What Are the Australian Sustainability Reporting Standards (ASRS)?

Think of the ASRS as a new chapter in your company's annual report pack, sitting right alongside your financial statements. For decades, we've had strict rules on how to report financial performance to give regulators and investors a clear and comparable picture. The ASRS applies that same logic to sustainability and climate-related risks and opportunities.

Customers, clients, government agencies, investors, lenders, and insurers are already beginning to demand to know how climate change might impact your (and your competitors’) bottom line. To achieve this, they want consistent, comparable, and reliable information. The ASRS is Australia's answer to this demand.

The standards were developed by the Australian Accounting Standards Board (AASB) and are based on the international standards (IFRS S1 and S2). In the last 24 months, similar reporting frameworks have been developed in many other advanced economies.

There are two key documents to be aware of:

• ASRS 1 (General Requirements): This is the foundational rulebook. It sets the overall principles for disclosing sustainability-related financial information. The key principle here is financial materiality—you are required to disclose information that could reasonably be expected to affect your company's value, cash flows, or access to finance.

• ASRS 2 (Climate-related Financial Disclosures): This is the first specific standard and will be your immediate focus. It details exactly what you need to report regarding your climate-related risks and opportunities.

In a nutshell: why your business should treat this as a priority

1. Legal and filing consequences: These disclosures are mandatory for captured entities - list and unlisted - and will be administered by ASIC; reports are lodged alongside financial reporting. Non-compliance risks regulatory scrutiny and potential market/credit impacts.

2. Stakeholder expectations: Customers, lenders, insurers and regulatory agencies increasingly assess and even price climate risk. Good disclosures supported by robust internal processes reduce financing friction and create commercial opportunities; poor (or late) disclosures increase cost and reputational risk.

3. Operational value: The process forces you to identify material climate risks/opportunities, which improves strategic planning and resilience while creating potential commercial opportunities not yet identified by competitors.

The ASRS regime is being phased in across three cohorts (Groups 1–3), with the criteria and timing for compliance for each group shown in Figure 1 below. Reporting will initially focus on climate-related financial disclosures; with other sustainability and ESG topics following later.

The 4 key components of your report

Your sustainability report must be structured around four interconnected pillars. This framework ensures you're telling a complete story about how your business is managing climate change related risks.

1. Governance 🏛️

This is about who is in charge. Your most important stakeholders will need to know that your board of directors and senior management are actively overseeing climate risk issues, not delegating them to a forgotten corner of the business.

• What to disclose: You'll need to describe the board's oversight of climate-related risks and opportunities and management's role in assessing and managing them.

• Think of it this way: Who is the captain of the ship, and how are they involved in navigating around the climate-related "icebergs"? Is the Board discussing this in their meetings?

2. Strategy 🗺️

This pillar explains how climate change risks and opportunities can be reasonably expected to impact your business plan and financial decision-making. It's about looking forward and connecting climate change directly to your company's future.

• What to disclose: Identify the specific climate-related risks (e.g., supply chain disruptions from extreme weather) and opportunities (e.g., increased demand for your low-carbon products) over the short, medium, and long term. Crucially, you'll need to report on the financial impact of these—both now and in the future. This section also requires you to conduct climate scenario analysis, which involves testing your strategy's resilience against different potential climate futures (e.g., a rapid transition to a low-carbon economy vs. a slower one).

• Think of it this way: What's your plan to not only survive but thrive in a changing world?

3. Risk Management 🛡️

This is about your processes. How do you find, assess, and manage your climate risks? This shouldn't be a standalone process; it must be integrated into your company's overall risk management framework and is an annual process as the science is constantly being updated (and projections continue to worsen).

• What to disclose: Describe your processes for identifying and assessing climate risks. Explain how you manage and mitigate them.

• Think of it this way: What's your system for spotting the icebergs, and what's the procedure when you do?

4. Metrics and Targets 📊

This is where the data lives. It's how you measure your performance and demonstrate progress. This pillar provides the qualitative and quantitative evidence that supports the story you tell in the other three sections.

What to disclose: The most significant metric here is your greenhouse gas (GHG) emissions. You'll need to report across three "scopes":

• Scope 1: Direct emissions from sources you own or control (e.g., fuel for company vehicles).

• Scope 2: Indirect emissions from the purchase of electricity, heat, or steam.

• Scope 3: All other indirect emissions that occur in your value chain (e.g., from your suppliers or the use of your products).

You will also need to disclose any climate-related targets you have set (e.g., 'reduce emissions by 30% by 2030') and your performance against them. But be careful not to make any claims that don’t stand up to scrutiny; the ACCC and ASIC are cracking down on greenwashing (and winning).

A Final Word of Advice

This new era of reporting is a marathon, not a sprint. The most successful companies will be those that view this not as a regulatory headache, but as a framework for building a more robust, efficient, and forward-looking business.

Treat the ASRS as risk management, not just compliance. Early, transparent, methodical reporting reduces regulatory and financing risk, improves strategic planning, and earns market credibility. By understanding your climate risks, you can mitigate them. By identifying your climate opportunities, you can capitalise on them.

Begin now — the technical work (data, scenarios, and assurance) takes time, and good disclosures are defensible ones. Use this reporting mandate to ask tough but necessary questions, strengthen your business strategy and planning, and tell a compelling story to your customers and other stakeholders about why your business is the one they should work with.