Lessons from the pioneers
Mandatory climate disclosure and the state of play in FY27
Post 3: Reporting to 2035 and beyond
Welcome to the final post of 4tomorrow’s series on how Australian Group 1 companies have approached mandatory climate disclosure.
In the last post we looked at some emerging trends from the implementation of AASB S2 and ASRS, and we’ll continue that today. If you’re just joining us now and you’d like to catch up, click here for article one and here for article two.
Trend 4: Climate risk increasingly integrates with finance
AASB S2 focuses on climate-related risks and opportunities that could reasonably be expected to affect an entity’s cash flows, access to finance or cost of capital [1]. This brings climate disclosure into the same conversation as capital planning, asset resilience, operational risk and financial strategy.
ASIC’s early observations about Group 1 reporters also point in this direction. The regulator encourages entities to consider past events, current conditions and forecast future conditions when identifying climate-related risks [2]. This means businesses will need to move beyond general statements about climate risk, like ‘a warmer but unpredictable climate may adversely impact our operations’, and will actually have to explain how risks may affect every facet of their product and its development.
To 2035, climate risk analysis is likely to become more detailed and more commercially relevant. Businesses may need to understand how extreme weather could affect sites, how carbon costs could affect margins, how customer expectations could shift demand, and how transition policies could affect asset values or operating models.
At every conference we’ve attended, climate risk has been the hot topic. Businesses have been grappling with how to
Fortunately, it’s relatively straightforward when you know your emissions footprint and can use data to see how your business is exposed. Once you have your emissions inventory, you can use a range of commercial and government-supplied information to map out a geographically granular view of risk.
Carbon management supports climate risk analysis by linking emissions data with the following:
· Transition risk modelling
· Carbon price exposure
· Asset-level assessments
· Decarbonisation planning
This work integrates climate data with financial and operational decision-making, and it’s what 4tomorrow specialises in.
Trend 5: Transition plans move from theory to practice
Trend 6: Boards and finance are now locked into the reporting cycle
As climate disclosure matures, businesses face greater pressure to explain how they intend to reduce emissions and manage climate-related risks. Targets will not be enough for many stakeholders. They’ll look for credible plans, interim milestones and evidence of progress. No more setting a reduction percentage for 2050 and then hoping someone else will come up with an idea to get there!
The tide is rising. Investors are now looking into business with an eye towards their plans for the future.
Showing your working and progress toward decarbonisation creates a practical need for roadmaps and everyone’s least favourite activity, monitoring and evaluation. Businesses will need to know which activities drive emissions, which reduction options are technically feasible, what they cost, when they can be implemented, and how they interact with broader business strategy.
They’ll also need to quickly find out what’s not working and adjust their strategies in near real-time.
How can they do this, I hear you think? You probably know where I’m going with this!
As luck would have it, carbon management services help businesses bridge the chasm of paralysis and move from emissions measurement to action. The knowledge gained from carbon management enables businesses to conduct emissions reduction initiatives like the following:
· Energy efficiency assessments
· Renewable electricity strategies
· Fleet transition planning
· Electrification pathways
· Supplier engagement programs
· Waste reduction initiatives
· Process improvements
· Marginal abatement cost analysis
· Behavioural change programs
As a psychology undergraduate, media refugee (long story), invasive species manager and now sustainability consultant, I believe effective communication is fundamentally underlined and shaped by the evidence on hand.
Emission inventories provide this evidence, giving sustainability project managers the confidence to make system change discussions effectively, and most importantly, communicate the intent of these changes across the business. Otherwise, these changes just don’t stick.
Climate reporting is now firmly a governance issue.
Entities must disclose information about governance processes, controls and procedures used to monitor and manage climate-related risks and opportunities under AASB S2 [1]. Directors, executives, finance teams, risk teams and operational leaders are now in it to win it.
Sustainability teams cannot carry the full reporting burden alone. They may coordinate the process, sending what seems like a million emails and setting up working groups, but climate disclosure depends on data and decisions that are sourced across the business.
Looking at sustainability as a concept can be difficult. A wise uncle once said to me that it’s like wrestling with a pillar of smoke. You can perceive it from far away and attach your own definition to it, but up close it reveals itself to be another product of a system, which takes the form of the context of that system. Basically, you know sustainability when you see it.
Ah so des, young grasshopper. I think I’ll write another blog post just about what sustainability actually is. Stay tuned.
In the meantime, carbon management supports internal capability by helping set governance processes to further develop reporting. This is especially important for organisations preparing for the first reporting cycle, who need to move quickly and build structured reporting discipline.
Ready to understand your emissions profile?
Whether you are preparing for mandatory climate disclosure or are responding to customer requests, 4tomorrow will help you take the next step.
Get in touch with our carbon management team to learn how we can support your business.
Thanks for reading, and until next time,
Harry
Carbon and Sustainability Consultant
References
[1] Australian Accounting Standards Board, “AASB S2 Climate-related Disclosures”, issued 20 September 2024.
https://standards.aasb.gov.au/aasb-s2-sep-2024
[2] ASIC, “ASIC issues early observations on sustainability reporting ahead of 30 June 2026”, published 18 May 2026. https://asic.gov.au/about-asic/news-centre/news-items/asic-issues-early-observations-on-sustainability-reporting-ahead-of-30-june-2026/
Are you ready to unlock the potential of your emissions profile?
Contact 4tomorrow today and take your first step toward a sustainable future.
