Over recent months, we have completed a number of sustainability reporting readiness assessments across a wide range of industries. While every organisation is different, a few consistent themes are emerging.
In this article, we discuss the five most common gaps we are seeing as organisations prepare for mandatory climate reporting under AASB S2 Climate-related Financial Disclosures.
1. No clear owner assigned
Governance is a foundational pillar of AASB S2, yet many organisations have not identified who is responsible for implementing mandatory climate reporting, both operationally and from an oversight perspective. Without clear ownership, progress stalls quickly.
How to close the gap:
Assign accountability early. This is almost always the highest-priority action in any readiness roadmap.
2. Limited practical understanding of the reporting requirements
This is unsurprising given AASB S2 is new, with minimal real-world reporting examples available so far. Once ownership is clarified, investing time in educating and upskilling those responsible is critical.
How to close the gap:
Invest early in education and upskilling. Without a solid grasp of the requirements, organisations often underestimate the time, effort and cross-functional coordination needed to prepare high quality disclosures.
3. Fragmented and decentralised data sources
This becomes particularly evident when organisations begin measuring their greenhouse gas (GHG) emissions. The first attempt at measuring Scope 1, 2 and 3 emissions often reveals that required data is scattered, inconsistently captured, or not stored in a usable format.
For example, employee travel data may exist in expense systems, but key emissions-relevant details are not routinely extracted and retained. This often leads to significant retrospective evidence gathering which can be time consuming.
How to close the gap:
Use your first GHG measurement exercise as a diagnostic. The insights gained are invaluable for designing processes that centralise, standardise and streamline future data capture.
4. Limited documentation of methodologies, assumptions and judgements
Similar to financial reporting, sustainability reporting requires transparency around estimates, methodologies and assumptions. Yet many organisations have little or no documentation to support the basis on which their AASB S2 disclosures have been prepared.
How to close the gap:
Start building documentation early. Clear articulation of methodologies and judgements improves efficiency, auditability and year‑on‑year consistency
5. In-house technical capability gaps
Some AASB S2 requirements such as scenario analysis, transition planning and assessing climate‑related risks are inherently technical. Many organisations simply do not know where to begin. For SMEs in particular, building this capability internally is often unfeasible.
How to close the gap:
Engage external expertise early and strategically. This is often essential to developing credible, compliant and decision‑useful disclosures.
None of these gaps are insurmountable. In fact, once responsibilities are defined and processes mapped, most organisations are more prepared than they initially believe. But the key is starting early. For Group 2 and 3 entities, the window to prepare for your first year of reporting is closing quickly.
A sustainability reporting readiness assessment is our recommended means to get started. It helps organisations understand where they are now, where they need to be, and provides a practical roadmap with prioritised actions to help them prepare thoughtfully and confidently for their first year of climate reporting.