The AASB S2 checklist for Group 2 reporters

The first AASB S2 disclosure is mostly a documentation exercise wearing a climate science costume. Below is what actually needs to exist before your auditor starts asking questions.

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

Work out 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 properly and early. Several entities have discovered they were Group 2 rather than Group 3 partway through a financial year, which removes a year of preparation time.

Governance: write down who is responsible

The standard wants the body or individual with oversight named, how often they receive climate information, and how climate considerations factor into strategy and risk management decisions. If your audit and risk committee has never formally taken this on, the minute recording that it has is the artefact you need.

Strategy: two scenarios, minimum

Scenario analysis is where most first-year effort goes. You need at least two, one aligned to the most ambitious Paris goal. The practical 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 too. Short, medium and long term have to be defined by you, in a way consistent with how you plan the business. If your capital planning runs to 2035, saying "long term means 2070" needs a reason.

Risk management: the physical risk evidence

This is the checklist item that behaves 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.

That last item is the one teams skip and then regret. 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. Note the units and the denominator you chose — "12% of sites" and "12% of carrying value" are different disclosures and readers will assume the less favourable one if you are vague.

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 they read the results, so write it for them.

What to do first

If you have three months: settle the site list, run a screening assessment, and use the results to work out which sites justify detailed study. If you have three weeks: settle the site list. Everything downstream depends on it, and portfolios are almost always messier than the finance team expects.