New climate reporting standards require organisations to rethink how they approach sustainability, but the energy sector is uniquely positioned to lead the charge.
The new year brought a new benchmark for climate-related financial disclosures, with the updated Australian Sustainability Reporting Standards (ASRS) coming into effect for the first in-scope organisations.
Issued by the Australian Accounting Standards Board (AASB), the ASRS provide a framework for relevant entities to assess and disclose information about climate-related risks and opportunities.
They consist of two standards:
- AASB S1 is voluntary, covering sustainability-related financial disclosures other than climate‑related information
- AASB S2 is mandatory, focusing on climate-related disclosures
As the driving force behind Australia’s net zero transition, the energy sector is no stranger to adapting to new frameworks, particularly when it comes to sustainability.
In-scope reporting entities are those that are required to submit financial statements under the Corporations Act and are divided into three groups. The groups are sorted by size thresholds for employees, assets and revenue, National Greenhouse and Energy Reporting Act reporting entities and Responsible Superannuation Entities or Managed Investment Schemes with $5 billion or more in assets under management.
Mandatory climate disclosures (AASB S2) are now applicable for group one entities as of 1 January 2025, with group two to follow from 1 July 2026 and group three from 1 July 2027. Under the new standards, in-scope entities are required to submit a sustainability report, including a climate statement, as part of their usual annual financial reporting.
The climate statement must cover specific points, ranging from governance and risk management to climate-related risks and opportunities. Specific metrics and targets must also be reported, including scope one, two and three emissions. Scope three emissions reporting becomes mandatory from the second reporting year.
The energy sector is already making strides to decarbonise, and addressing indirect emissions generated in the supply chain is the logical next step to achieve the country’s climate goals.
By embracing the new regulations and taking immediate action to comply with AASB S1 and AASB S2, the energy sector has the opportunity to set the standard for transparency and sustainability Australia-wide, paving the way for other industries to follow suit.
However, this process is not always easy. In particular, tracking, managing and reporting scope three emissions is a complex task. It involves understanding and prioritising emissions sources, gathering credible data and applying appropriate calculations – challenges that can be overwhelming without the right tools or expertise, so securing the right support is crucial.
Taking the next step
Navigating the complexities of ASRS compliance can be daunting, particularly with the addition of scope three reporting.
But it doesn’t have to be. With Avetta and ReGen Strategic, you can master the ever-changing environmental, social and governance (ESG) landscape and transform your approach to sustainability reporting, ensuring full compliance with ESG standards such as ASRS.
Avetta offers comprehensive sustainability solutions, and collectively with ReGen Strategic, can support you to:
- Capture scope three emissions with data directly from suppliers
- Ease the reporting burden for suppliers with a free carbon calculator
- Support supplier compliance and continuous improvement with access to sustainability and decarbonisation playbooks
- Go beyond calculations with transparency into material sustainability businesses risks in the supply chain
- Build assurance with sustainability and social auditing by global experts
Sustainability is an ongoing journey, not a one-off project.
That’s why Avetta and ReGen Strategic supports their clients and their contractors’ ESG maturity, monitoring continual progress and enhancing sustainability scores and impact wherever possible.
The companies also provide benchmarking comparisons against similar supplier trade types, highlighting additional performance opportunities.
As the world’s largest supply chain risk management network, let Avetta – and ReGen Strategic – guide you to ASRS compliance.
For more information, visit avetta.com/en-au and regenstrategic.com.au
