Nicole: Hi everyone, and welcome back to Sustainability Matters. My name is Nicole Mohan, and I’m RSM’s National Sustainability Lead and a Partner in ESG and Climate Services.

Tom: Hi, my name is Tom Bofinger and I’m a Senior Manager in ESG and Climate Services. 

Today, we’re sharing key insights from our internal analysis ahead of the 30 June 2026 reporting period. Our insights aim to provide a clear view of what the first wave of mandatory AASB S2 climate disclosures has revealed and what organisations yet to disclose, should be prioritising, as reporting matures. 

Tom: From a market perspective, there are a few clear observations emerging from the first wave: 

• Approximately 30 – 40 Group 1 entities have now published AASB S2-aligned disclosures.
• The top 5 sectors include mining, construction, financial services, oil and gas and electricity and energy distribution
• Most disclosures are embedded within annual reports.
• And all first-wave reports have received an unmodified limited assurance opinion 

Nicole: A key takeaway from the first wave is that we’re starting to see consistent patterns in how boards and management teams approached judgement, risk and defensibility in Year 1.

In particular we noticed that: 

• Reports varied from 7 to 80 pages. Generally, larger, more carbon-exposed organisations disclosed a higher volume; whereas smaller or first-year issuers tended toward compliance-only. 
• Data readiness challenges were near-universal in Year 1 disclosures 
• Most organisations are integrating climate into their enterprise risk management frameworks. However, there is still inconsistency in how financial thresholds are defined and applied to climate risks - which directly affects materiality outcomes.
• Lastly, it is important to consider the ‘materiality’ definition from the organisational point of view, which is what is reasonable expected to affect the entities prospects vs. materiality from the assurance perspective which is considering who your primary users of reporting are.

Tom: Scenario analysis is one of the areas where the most divergence emerged. While most organisations met the technical requirements, differences arose in:

• How time horizons were defined,
• How scenarios were selected, and
• How they were applied in practice.

For example:

• Some organisations applied shorter-term horizons of 10 years,
• While others extended analysis to 2050 and beyond.
• In asset-intensive sectors, we also observed time horizons being aligned to asset life or operational timelines, rather than fixed dates.

Importantly, these early decisions directly influenced:

• What could be quantified, and
• The extent to which proportionality could be applied.

We also saw a clear maturity gap in the quantification of financial impacts, with many organisations still working through how to translate climate risks into defensible financial outcomes.

Nicole: Another key insight is the distinction between describing governance and demonstrating it in practice. While approximately 97% of organisations disclosed board or committee oversight, the real challenge lies in evidencing:

• How decisions were made,
• What trade-offs were considered, and
• How those decisions informed disclosures.

It is important to have some key documentation and processes front of mind which includes Board/Committee Charters, standing agenda items in meeting minutes and evidence of how climate related risks and opportunities are discussed and incorporated.

Tom: We also observed consistent patterns where organisations exercised caution.

• Only around one-third of entities disclosed Scope 3 emissions in the first wave.
• Around 65–67% disclosed emissions targets, with others deferring.

These are not gaps, they are risk-informed decisions, driven by data maturity and assurance readiness.

A key improvement area we can suggest is the clarity of value chain mapping, which underpins both:

• The identification of climate-related risks and opportunities, and
• The development of future Scope 3 disclosures.

Nicole: The first wave of AASB S2 reporting shows that this is not about achieving perfection in Year 1. It is about making well-reasoned decisions, supported by clear disclosure and robust evidence.

For organisations yet to report, hopefully these insights provide a valuable opportunity to focus efforts on where it will matter most.

Thank you for tuning into this episode of Sustainability Matters. To find out more about climate disclosure reporting, please contact us or your local RSM adviser.