The AASB S2 checklist for Group 2 reporters

The first AASB S2 disclosure is mostly a documentation exercise. This checklist lists what needs to exist before your auditor starts asking questions.

We wrote it after working with several Group 2 finance teams who had reached the same conclusion independently: the narrative sections were manageable, and the physical risk evidence was where the project stalled.

Confirm whether you are in scope

Group 2 covers entities meeting two of three thresholds: consolidated revenue of $200 million or more, consolidated gross assets of $500 million or more, or 250 or more employees. It also captures entities registered under Chapter 2M of the Corporations Act that meet the NGER publication threshold.

Check this early. Several entities have found they were Group 2 rather than Group 3 partway through a financial year, which removes a year of preparation time.

Governance: record who is responsible

The standard requires the body or individual with oversight to be named, how often they receive climate information, and how climate considerations enter strategy and risk management decisions. If your audit and risk committee has not formally taken this on, the minute recording that it has is the required artefact.

Strategy: two scenarios, minimum

Scenario analysis takes most of the first-year effort. You need at least two scenarios, one aligned to the most ambitious Paris goal. The common pairing for Australian physical risk work is SSP2-4.5 against SSP5-8.5, sometimes with SSP1-2.6 added as the ambitious case.

Document the horizons. Short, medium and long term must be defined by you, consistent with how you plan the business. If your capital planning runs to 2035, defining long term as 2070 needs a reason.

Risk management: the physical risk evidence

This is the checklist item least like accounting work:

• A definitive list of sites, with addresses or coordinates you trust.
• Each site resolved to a parcel, not just a pin.
• Hazard exposure per site per hazard, with the source layer named.
• Scenario and horizon applied consistently across the portfolio.
• Sites with insufficient data flagged as unassessed rather than scored.
• A methodology record naming every dataset, its vintage and its licence.

The last item is the one teams skip. Nine months after the assessment, nobody remembers which version of a council flood study was used, and reconstructing it costs more than recording it did.

Metrics and targets

Report the amount and percentage of assets or business activities vulnerable to physical risk, and to transition risk. State the units and the denominator. "12% of sites" and "12% of carrying value" are different disclosures, and readers will assume the less favourable one if the denominator is not stated.

Scope 1 and 2 emissions are required. Group 2 entities get relief on Scope 3 in the first year only.

Assurance

Limited assurance over Scope 1 and 2 in the early years, expanding over time. Your assurance provider will read the methodology appendix before the results, so write it for them.

What to do first

With three months: settle the site list, run a screening assessment, and use the results to decide which sites justify detailed study. With three weeks: settle the site list. Everything downstream depends on it, and portfolios are usually less tidy than the finance team expects.