The clock is ticking for Group 2 and 3 reporters – Early insights and themes from Australia’s first mandated Climate Statements

Australia’s mandatory climate-related disclosure era has officially begun. Across February and March 2026, the first wave of Group 1 companies have started to release their annual reports encompassing AASB S2-aligned Climate Statements – the early picture is varied and a window into what to expect for your business. Some reporters are setting a high bar. Others are navigating the same questions your team is wrestling with right now. If you’re a Group 2 or Group 3 company preparing to report, this is your advance intelligence. Learn from those who went first — what’s working, what’s organisations are still working towards, and what the bar looks like before you’re the one setting it.

This paper is one of a four-part series over the coming months and unpacks the following key thematics:

• A push to integrate and simplify at minimum reporting
• Where do all of the voluntary Sustainability related disclosures now live?
• Exercising the right to transition relief during the grace period
• Climate is an emerging Board competency
• The directors’ declarations vary in coverage
• Trends in Climate risks and opportunities (CRROs) align with the National Climate Risk Assessment report
• Scenario analysis is a hybrid of qualitative methods supplemented with quantitative in this first year
• Time horizons for risk analysis align with business planning and growth milestones
• Linking climate related risk and opportunity analysis and financial impacts continues to challenge reporters
• Materiality treatments align with both risk severity and financial reporting thresholds
• Targets and Transition Plans are not yet formalised
• Value chain collaboration is essential in decarbonisation and transition pathways

Context, Scope, & Limitations

At the time of this paper, a number of ASX listed organisations with 31 December 2025 year- end financial reporting periods have released and disclosed their very first AASB S2 aligned mandatory Climate Statements to market.

This thought leadership paper aims to highlight any early insights, observations, noticeable themes, and provide a balanced perspective of industry specialists, as Australia’s first AASB S2 aligned Climate Statements start trickling through.

Rennie Advisory (Climate & Sustainability Risk and Reporting Advisory specialists), together with Jo Taranto (Climate Leadership and Environmental Strategist) have undertaken an initial desktop review of a cross section of early reporters curated from a range of sectors and market capitalisation to distil early insights and themes from the first wave of reporting. Observations have been balanced with the different specialist perspectives contributions based on the contributors own experiences supporting the market with AASB S2 readiness and reporting.

The sample includes 13 publicly available Climate related financial disclosure Statements, and the review has been structured around assessing the disclosures against the four key pillars of the AASB S2 reporting requirements, drawing out observations and thematics and applying a specialist perspective. This is not a statistical analysis or detailed benchmarking report against structured assessment criteria, nor is it a legal or compliance review.

This thought leadership paper is for general information only. This paper has not been prepared to support decision making. Any decisions on climate reporting should be made in conjunction with internal expert teams and with the support of external advisors.

What we have noticed – some early insights and a specialist’s point of view:

A push to integrate and simplify at minimum reporting

Climate Statements vary in terms of how they have been presented, their length and amount of detail. Most samples reviewed are presented as a dedicated Sustainability Report section embedded within the organisation’s Annual Report. This is alongside the Corporate Governance Statements, Remuneration, Financial Statements & Notes to Financial Statements. In some instances, data points such as Board Governance and skills have been cross-referenced to other existing Annual Report sections, rather than repeated within the dedicated Climate Statement section. There are no samples reviewed where the Climate Statement is presented as a stand-alone document separate to the Annual or Sustainability Report, apart from GPT Group, who has voluntarily submitted a Climate & Nature Statement (ahead of statutory obligations starting in 2027 onwards for Registered Schemes).

The length of the statements varies with the 13 samples we reviewed being between 8 to 33 pages, with an average of 24 pages (this excludes the cover page, directors’ declaration and assurance statements and any supporting notes). It is understood from other reporting lessons papers that have recently been released to market there are some examples which extend up to 84 pages in length (which we have not reviewed in this sample). The length of the Climate Statement appears to correlate with the size of the organisation and complexity of its operations / climate risk exposures, as well as the current level of maturity regarding the management of climate related risks and opportunities.

Where do all of the voluntary Sustainability related disclosures now live?

Most Climate Statements reviewed are labelled as a ‘Sustainability Report’, however most only cover the statutory mandated climate risk and opportunity disclosure requirements. In the sample of reports reviewed, we observed both other mandatory and non-mandatory sustainability related disclosures within other sections of the Annual Report driven by other legislative instruments. For example, the Diversity & Inclusion (WGEA) and Health & Safety performance (WHS Act) in the People section, Board climate skills in the Governance section (Corp Act), or climate targets linked to incentives (Remuneration Act) in the Remuneration sections. We also noted in some cases commitments to release standalone Sustainability reports available alongside annual reports on the company websites at future timeframes. Some reporters are articulating within their Sustainability Report what is mandatory from a statutory perspective under AASB S2 vs voluntary in their disclosures. A good example of this is Telix Pharmaceuticals.

Exercising the right to transition relief during the grace period

Reporters frequently utilise transition relief measures, such as excluding Scope 3 GHG emissions disclosures and comparative information. There are very few examples (less than half of the sample) with Scope 3 disclosures, and even fewer examples of assurance obtained beyond those stipulated as at minimum in the regime (one).

Limited Assurance has been provided predominately by the Big 4 auditors, over Governance Disclosures Paragraph 6, Strategy (risk and opportunities) sub para 9(a), 10(a) and 10(b) and Scope 1 GHG and Scope 2 GHG – Sub paragraphs 29(a)(i)(1) to (2) and 29 (AA)(ii) to (v).

Rio Tinto is notable within the sample, providing reasonable levels of assurance over several Scope 1 and 2 related metrics which is beyond the compliance expectation in year one of reporting.

Climate is an emerging Board competency

Most Climate Governance Statements capture Board composition and skills within matrices (which has always been a requirement under the Corporations Act). Very few samples reviewed specify or clearly disaggregate climate related skills, experience and competencies of the Directors, rather, this is captured collectively alongside ESG/Sustainability skillset. This makes it difficult to discern specific climate competencies.

Most reporters have disclosed that internal self-assessments and internal uplift and Board, Risk or Audit team training programs have been rolled out in the past 12 months which relate to building competencies in climate risks and opportunities.

Most companies adopted transition relief in providing a modified directors’ declaration.

For the financial years commencing between 1 January 2025 and 31 December 2027, directors can adopt transition relief by declaring that, in their opinion, the entity has taken reasonable steps to ensure that the sustainability report (other than the directors’ declaration) is in accordance with the Corporations Act and AASB S2 (s296A(6) as modified by s1707C(2). In the sample of sustainability reports reviewed, most companies adopted this transition relief.

Trends in Climate risks and opportunities (CRROs) align with the National Climate Risk Assessment report

Physical risks

Companies operating within the Financial Services and Mining, Energy & Resources dominate the first group of reporters. These sectors have differing risk perspectives, Financial Services focus on portfolio value at risk and assets in climate-exposed areas, while Mining, Energy & Resources emphasise physical asset resilience affecting revenues and supply chain disruption. The most common physical hazards cited include flooding, extreme rainfall, storms (cyclones / wind / hail), heatwaves and high temperatures, bushfires, and drought / water stress.

Transition risks

There is an emphasis on policy and regulation, carbon pricing, technology readiness and shifts in market demands driven by reputation and consumer expectations. Transition risks indicate that businesses expect disruption to their infrastructure and supply chains, increasing their cost base, with more significant impacts noted between +2 °c vs +3 °c futures. Other considerations include human capital, supply chain costs, energy price volatility, capital access, and legal risks.

Climate opportunities

Whilst the focus is mostly on risks, there are also some examples of opportunities assessed and disclosed in the reporting samples that focus on evolving stakeholder expectations linked to the transition to a lower-carbon economy. Key opportunities include diversification through climate/green products and services, investment in transition technologies, low-carbon and alternative fuels, and support for the energy transition across the business’ value chain.

Scenario analysis is a hybrid of qualitative methods supplemented with quantitative in this first year

There are very few examples of fulsome quantitative scenario analysis methods and outputs being disclosed in reports. Reporters have mostly leveraged qualitative methods and disclosures in the first year of reporting. In many cases, these have been supplemented with quantitative methods of analysis, such as financial modelling where it is possible to do so.

Most organisations have selected up to 3 scenarios which reflect a worst case (high emissions/hot world – 3-4°c+), best case (low emissions/net-zero/fast action – 1.5°c) and most likely (moderate/orderly – 2.5-3°c) scenarios. Reporters are often utilising several data sources to define their own custom scenarios, capturing their assumptions, relevance and mapping these to the IPCC global warming potential ranges. The most dominant data sources include IPCC, NGFS, IEA, AEMO, Sectorial Pathways.

Reporters are testing the most material risks and opportunities against these scenarios and in a succinct tabular format capturing relevance, impacts to business model and value chain. The tables also capture mostly qualitative narrative for current reporting year financial impacts and potential anticipated impacts in the short, medium and long term, as well as mitigation and adaptation measures. In some cases, these impacts are also translated in more quantitative terms.

Time horizons for risk analysis align with business planning and growth milestones

Short-term risk analysis timeframes tend to align with annual business planning processes and span approximately between 2-5 years. The medium-term timeframes align with extended planning horizons for growth and decarbonisation / transition initiatives / interim targets and span on average 5-10 years. The longer-term risk analysis timeframes tend to consider the full lifespan of assets or infrastructure in portfolios, as well as the continued impact that climate risks and opportunities are expected to have on the business and span on average 10-25+ years.

Linking climate related risk and opportunity analysis and financial impacts continues to challenge reporters

In some cases, reporters have disclosed that their climate-related risks and opportunities do not have a material financial impact on the entity’s operations, financial position, business strategies and future prospects, using their financial materiality thresholds and risk assessment processes to inform this position.

In other cases, reporters have identified material climate related risks and current and anticipated financial impacts. They have mostly qualitatively disclosed narrative to describe how those impacts translate into financial impacts, and in many cases gone one step further to quantify those impacts. Examples include potential asset impairments and changes to the useful lives of assets, capital expenditure requirements, increases or decreases in operational costs and industry specific metrics such as gross written premium rates and carrying value for the insurance sector.

Materiality has been determined with reference to risk severity and financial reporting thresholds

The majority of the reviewed samples incorporate a process for prioritisation of CRROs, which includes evaluating likelihood and potential consequences against risk criteria and descriptions within the organisation’s risk management framework and subsequently examining the potential financial impacts of the identified CRRO’s against the organisations financial reporting materiality thresholds.

Targets and Transition Plans are not yet formalised

Many reporters have set interim 2030 and net-zero 2050 targets, alongside specific Scope 1 and 2 reduction targets for gross/net emissions. Often the interim targets are specific to certain assets or operations / areas of the portfolio. Very few have science-based verified targets by the SBTi. Alongside these are other climate related transition plan targets such as targets for capital investment spend into renewable infrastructure or decarb opportunities, expansion of GHG measurement into Scope 3 categories, portfolio engagement targets, expansion of climate capabilities, and considerations into business processes.

In most cases, reporters have not specified any targets at all, and there is either no mention, or they have stated in disclosures that targets and transition plans are not yet in place.

Value chain collaboration is essential in decarbonisation and transition pathways

Common levers which have been employed by the reporting sample span across supplier engagement, contracting approaches including minimum terms and conditions, diversification of portfolios and supplier bases, alternative technologies and fuels, capital investment into renewable energy infrastructure sources, upgrading of infrastructure, exploration of feasibility into new “greener” products/solutions that leverage climate opportunities, customer and value chain collaboration, purchasing of carbon credits.

In the sample reports reviewed, the disclosed price on carbon ranges from between no internal price on carbon set to $0/tCO2e through to an upper range of $250/t CO2e. In many cases this varies between scenarios being assessed.

What next?

Over the coming months, we look forward to the remaining Group 1 reporters releasing to market. Our teams will be watching closely and continuing to review and provide ongoing insights as we build our database of insights.

If you’re caught in Group 2, and you haven’t yet started preparations – this is your sign!

We hope you have found this piece insightful and useful, and, if so, look out for our upcoming publications on:

1. What Group 1 reporters wish they knew while preparing, and what pushback to anticipate with your Board and Leadership Team? (Mar 26)
2. Tips & Tricks for improving the clarity and succinctness of your Climate reporting (Apr 26)
3. Detailed AASB S2 Sector Benchmarking Report (July-Sept 26)