AASB S2 climate reporting: practical lessons for CFOs from Group 1 reporters

Mandatory climate reporting under AASB S2 is moving quickly from a technical reporting issue to a core finance, governance and risk management priority. 

For Group 2 and Group 3 organisations, particularly mid-sized corporates with leaner finance and sustainability teams, the experience of early Group 1 reporters provides a valuable preview of what is coming. 

Crowe’s analysis of a sample of December 2025 Group 1 climate reports shows that the challenge is not simply preparing a disclosure document. It is building an assurance-ready, practical, and supportable reporting process that can stand up to board, investor, lender and regulator scrutiny. View Crowe’s full report here. 

The key message for CFOs is clear: 

Early reporters are still building capability in areas such as scenario analysis, quantification of financial effects, Scope 3 GHG emissions and target-setting. For later reporters, this creates an opportunity to learn from the first cohort and develop a roadmap that is proportionate to the organisation’s size, sector, climate exposure and available resources.

Below, we share five key insights from our review over the December 2025 Group 1 climate reports: 

1. Report structure: clarity over volume 

One of the most immediate questions for finance teams is what the final climate report should look like. The reports reviewed varied significantly in structure and length, with disclosures ranging from concise reports to much longer documents, depending on sector and exposure to climate-related risks and opportunities. Many early reporters integrated climate-related disclosures into their annual reports, rather than producing a standalone sustainability report. 

As expected, strategy disclosures tended to make up a significant portion of the total report, reflecting the breadth of forward-looking analysis and information required under AASB S2.

For CFOs, the lesson is not to use report length as a measure of quality. A longer report does not necessarily mean better disclosure, and vice versa. The focus should be on whether the report is complete, supportable and decision-useful. A practical starting point is to map the expected report structure early, use a disclosure checklist against AASB S2 requirements, and consider an upfront “basis of reporting” section that explains matters such as reporting scope, materiality, judgements, measurement uncertainty and cross-references.

2. Governance: accountability matters more than structure 

Early reporters generally presentedrelatively mature governance disclosures. Many described board oversight, management committees, sustainability steering groups or equivalent working groups. However, AASB S2 does not require a specific governance model or committee structure. The important question is whether the organisation can clearly explain how climate-related risks and opportunities are monitored, managed and overseen.

For mid-sized corporates, this is an important point. New committees are not always required. Existing board, audit and risk, executive or management forums may be sufficient if roles and responsibilities are clearly defined. CFOs should focus on documenting who owns climate reporting, who reviews the information, how matters are escalated, how the board retains oversight, and what evidence supports review and approval. Finance also has a critical role in data quality, controls, financial impactassessment, budgeting, forecasting and assurance readiness.

3. Climate-risk assessment: the foundation for the report 

Climate-risk assessment is the foundation for many other AASB S2 disclosures, including strategy, scenario analysis, metrics, targets and financial effects. The early reports reviewed generally identified climate-related risks, opportunities and time horizons, but the level of detail and comparability varied.

For CFOs, the practical challenge is to move beyond listing climate risks and opportunities. A useful assessment should explain:

• why a risk matters;
• when it may arise;
• how it could affect the business; and 
• what management is doing in response. 

Climate-related risks and opportunities should be identified early in the reporting process and linked to existing enterprise risk management processes where possible.

4. Scenario analysis: start proportionately, but make it relevant 

Scenario analysis is proving to be one of the more challenging areas of AASB S2 strategy disclosure. Early reporters commonly used the mandated two scenarios, while some used additional scenarios to test a broader range of transition and physical risk outcomes. Some reporters provided quantified outputs, but many relied on the proportionate mechanism available in AASB S2, providing qualitative analysis as data, assumptions and modelling capability continue to mature. 

For Group 2 and Group 3 organisations, a proportionate starting point is reasonable. The analysis does not need to be overly complex in the first year, but it should be clearly connected to the organisation’s actual climate-related risks and opportunities. Generic climate pathways that are disconnected from the business model, assets, operations, customers or financial planning will be less useful. 

CFOs should ensure that scenario selection, assumptions, data sources, management review and board challenge are documented, as this evidence trail will become increasingly important for assurance readiness.  

Metrics and targets remain areas of developing maturity. Early reporters varied in whether they disclosed specific climate-related targets. AASB S2 does not compel organisations to set climate-related targets. However, where targets exist, they should be disclosed clearly and linked to the organisation’s identified climate-related risks and opportunities. Where targets do not exist, organisations should be transparent about that position.

Many reporters used available transitional relief not to disclose Scope 3 greenhouse gas emissions. This reflects the practical challenge of collecting value chain emissions data and building the systems, controls and supplier engagement processes needed to support reliable disclosure. 

However, CFOs should not wait until Scope 3 GHG disclosure becomes mandatory. The better approach is to use the transitional period to identify material Scope 3 categories, assign data owners, document methodologies, test controls and consider dry-run or pre-assurance reviews.

What CFOs should do now

For busy CFOs and finance leaders, the first step is not to write the report. It is to build the reporting discipline behind it. The most practical actions are to:

• define governance and accountability;
• identify climate-related risks and opportunities early;
• connect climate matters to overall company risk, strategy and financial planning;
• map AASB S2 disclosure requirements to available data and evidence;
• build a roadmap for scenario analysis, Scope 3, metrics and targets; and 
• engage internal stakeholders early across finance, risk, sustainability, legal, operations and the board. 

The strongest lesson from early reporters is that credible climate reporting takes longer than expected. Group 2 and Group 3 organisations have an opportunity to use the experience of the first wave to avoid unnecessary rework and build a more practical, proportionate and defensible reporting process.