AASB S1 is not mandatory. AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information is a voluntary standard that entities can elect to apply. AASB S2 Climate-related Disclosures is the only Australian sustainability standard made mandatory through the Corporations Act 2001.
Key points
- AASB S1 is voluntary, AASB S2 is mandatory for entities covered by the Corporations Act
- AASB S2 stands alone through Appendix D
- Appendix D carries fair presentation, materiality, reporting entity, timing, judgements, uncertainty and errors
- Voluntary AASB S1 adopters must meet all its requirements
- Aus7.1 and Aus26.1 call for integrated disclosures when AASB S1 is also applied
How AASB S2 works without AASB S1
Internationally, the ISSB designed IFRS S2 to be applied together with IFRS S1. The AASB took a different path and made AASB S2 the standalone mandatory standard for climate-related financial disclosures. Appendix D of AASB S2 brings across the content of IFRS S1 that climate reporting needs, including:
- conceptual foundations such as fair presentation, materiality and connected information
- the reporting entity
- where disclosures are located and when they are reported
- comparative information and the statement of compliance
- judgements, measurement uncertainty and errors
An entity applying AASB S2 therefore follows Appendix D rather than AASB S1.
If an entity chooses to apply AASB S1
AASB S1 covers sustainability-related risks and opportunities of every kind, not only climate. An entity that applies it voluntarily must meet all of its requirements before it can claim compliance. Where oversight of sustainability-related risks and opportunities is managed in an integrated way, AASB S2 asks the entity to give integrated governance and risk management disclosures rather than repeating them for each topic (paragraphs Aus7.1 and Aus26.1).
What the Corporations Act requires today
ASIC describes climate-related financial disclosure as the first, and at this stage only, component of the sustainability report. The climate statements in that report are prepared under AASB S2. Any extension of the sustainability report to other topics would need further change to the law.
Why it matters for asset-intensive operations
Water, biodiversity, land and community topics are often material for mining, energy and utilities, and investors and lenders ask about them. AASB S1 offers a structured way to report those topics on the same basis as climate, but applying it is a choice, not an obligation. For most entities the priority is a compliant AASB S2 report first, with AASB S1 considered once the climate reporting process is stable and assured.
References & sources
Primary regulatory documents and authoritative references underpinning this answer.