Produce your ASRS (Australia) sustainability reports with Speeki.

ASRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information): ASRS S1 is a voluntary standard that allows entities to report on broader sustainability topics beyond climate, such as biodiversity and water usage, and is closely aligned with the international IFRS S1 standard.  This standard has been made voluntary and is not issued by the AASB for purposes of the Corporations Act 2001, meaning entities caught by the new climate reporting framework will not have to comply with ASRS S1 when preparing their mandatory sustainability reports under local requirements. It follows the four pillars framework of governance, strategy, risk management, and metrics and targets, providing a comprehensive approach for companies that choose to voluntarily disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital over the short, medium, or long term.

‍ASRS S2 (Climate-related Disclosures):ASRS S2 is a mandatory standard for in-scope entities that focuses solely on climate-related risks and opportunities, requiring entities to assess and disclose information about their climate-related financial risks in a sustainability report as part of their annual reporting requirements. This standard is closely aligned with IFRS S2 and includes detailed disclosures related to the four pillars (governance, strategy, risk management, and metrics and targets) specifically on climate-related opportunities, physical and transition risks, greenhouse gas emissions (Scope 1, 2 & 3), climate-related transition plans, and corresponding reduction targets.

To satisfy their reporting obligations under Australia's mandatory climate reporting framework, in-scope entities must comply with the disclosure requirements prescribed by ASRS S2, which includes preparing a climate statement, notes to the climate statement, and a directors' declaration confirming compliance with the standard.

Compliance with ASRS is important for companies for several critical reasons spanning legal, financial, strategic, and reputational considerations:

‍Legal and Regulatory Compliance: Non-compliance penalties under ASRS closely mirror financial reporting penalties under the Corporations Act, with civil penalties for directors failing to ensure compliance. Unlike international IFRS standards, these are national laws that impose civil penalties for non-compliance, making adherence mandatory rather than optional for in-scope entities.

‍Investor and Stakeholder Expectations: Investors want to know how a company's sustainability-related risks and opportunities align with its strategy and business model and, ultimately, its prospects for creating long-term value. ASRS - Australian Sustainability Reporting Standards Investors prioritize companies with robust ESG practices, and by adhering to the ASRS, businesses can attract sustainable investments and secure long-term funding.

‍Global Competitiveness and Market Access: The ASRS positions Australian businesses alongside global peers in major markets around the world, setting a global benchmark and standard for sustainability-related reporting. ASRS - Australian Sustainability Reporting Standards The Australian Sustainability Reporting Standards align closely with established global sustainability frameworks, enabling Australian businesses to compete effectively in a globalised market.

‍Risk Management and Strategic Benefits: Sustainability reporting highlights potential risks, such as climate change impacts or supply chain vulnerabilities, allowing companies to mitigate them proactively. Business leaders view the ASRS as both a compliance requirement and an opportunity to enhance governance, drive innovation, and meet market expectations. ASRS - Australian Sustainability Reporting Standards Standardized reporting fosters transparency, enabling stakeholders to assess a company's sustainability performance accurately.

‍Future-Proofing and Leadership: With governments worldwide introducing stricter ESG-related regulations, the ASRS helps Australian companies stay ahead of compliance requirements. For businesses, adopting the ASRS isn't just about compliance—it's an opportunity to showcase leadership, build trust, and contribute to a sustainable future.

The Australian Sustainability Reporting Standards (ASRS) are closely aligned with the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, specifically IFRS S1 and IFRS S2, as the Australian Accounting Standards Board deliberately used the ISSB's work as a foundation with modifications for Australian-specific requirements.

The final ASRS standards are broadly aligned with the IFRS Sustainability Disclosure Standards, with AASB S1 (voluntary) corresponding to IFRS S1 for general sustainability disclosures and AASB S2 (mandatory) aligning with IFRS S2 for climate-related disclosures.

Companies should consider following ASRS even if they are technically out of scope for several compelling strategic and business reasons:

‍Supply Chain Pressure and Expectations: Whether your organization falls under Group 1 starting from January 1, 2025, to report to ASRS and AASB S2, subsequent Groups 2 or 3, or is voluntarily reporting to align with stakeholders who must report and have heightened expectations for the supply chain – these new standards may still impact you. Even companies who don't meet the threshold to report on Scope 3 themselves will need to know a certain amount of information because they will most likely sit within the supply chain of an organization affected by the rules. This creates a cascading effect where larger companies will increasingly demand sustainability data from their suppliers and partners.

‍Future-Proofing and Market Position: Even companies who do not fall under the mandated scope, they should look to embark on emission accounting if they have not already. When Scope 3 emissions reporting becomes a requirement, there will be increased demand for value chain emission data, spilling over to smaller companies, who in turn have to disclose their own emissions data. Early adoption positions companies advantageously as the reporting framework expands to cover more entities in subsequent phases.

‍Investor and Stakeholder Confidence: This is an important first step for Australia to introduce standardized reporting requirements in Australia, providing investors with consistent and transparent information for their investment decisions. Voluntary compliance demonstrates proactive governance and transparency, which increasingly influences investment decisions, customer preferences, and business partnerships.

ASRS defines materiality following the same approach as the international IFRS S1 and S2 standards, which it is aligned with.

All disclosures required by IFRS S1 and IFRS S2 are subject to an assessment of materiality. The International Accounting Standards Board's (IASB) definition of material information and primary users is consistent with the Conceptual Framework for Financial Reporting (Conceptual Framework). IFRS S1 uses definitions and requirements that are consistent with the IASB's Conceptual Framework, IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

‍Financial Materiality Focus: IFRS S1 and S2 are focused on financially material environmental, social, and governance (ESG) risks and opportunities that affect the overall bottom line. This represents a "single materiality" approach focused on financial impacts to the entity, as opposed to the "double materiality" concept used in some other frameworks like the European CSRD.

‍Specific Definition: ASRS requires entities to disclose information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, its access to finance or cost of capital over the short, medium or long term. Information is considered material if omitting or misrepresenting it can impact investors' decision-making.

‍Assessment Requirements: Assessment and disclosure of material climate-related risks and opportunities affecting entities business model and value chain including the effect on financial position, financial performance and cash flows. Financial materiality needs to be determined. These insights are sought by the investment community: Determining how business' sustainability actions could introduce climate-related risks or opportunities capable of affecting financial performance is crucial for transparent ASRS reporting.

‍Practical Application: Companies must conduct a materiality assessment to determine which climate-related risks and opportunities are most relevant to their business, engaging with stakeholders, analyzing industry trends, and assessing the potential financial impact of these climate-related risks. This assessment is fundamental to determining what information must be disclosed under ASRS, ensuring that companies focus their reporting on sustainability matters that have genuine financial relevance to investors and other capital providers.

The materiality definition under ASRS is therefore investor-focused and financially-oriented, requiring companies to identify and disclose sustainability-related information that could reasonably be expected to influence economic decisions about providing resources to the entity.

Scope 1 and 2 Emissions: ASRS requires disclosure of Scope 1 and 2 greenhouse gas emissions from the first year of reporting. These direct and indirect emissions from electricity consumption must be reported immediately when companies come into scope.

‍Scope 3 Emissions - Phased Approach: ASRS and AASB S2 allow for a 1-year relief for reporting Scope 3 emissions (which cover indirect emissions related to your organisation's value chain and financing or investment activities). This means reporting Scope 3 emissions will be mandatory from your second reporting period.

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