The latest on aligning Australian and international climate-related disclosure

Board meeting

Decisions taken

6-7 June 2024

• ASRS 1, the equivalent of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information will be a voluntary standard, covering all sustainability-related financial disclosures.
• There will be no cross-referencing between ASRS 2 Climate-related Financial Disclosures and ASRS 1. Although reducing the number of duplicate disclosures between the two standards, having to continually cross-reference to ASRS 1 for ‘missing disclosures’ would have been a cumbersome and time-consuming process.
• ASRS 2 will align with the baseline IFRS S2 Climate-related Disclosures, without modification, with respect to the requirements for scope, cross-industry metrics, measuring greenhouse gas (GHG) emissions, definition of greenhouse gases, CO₂ equivalent conversion for GHG emissions, Scope 2 GHG emissions and Scope 3 GHG categories.

You can find more information about this in our previous article.

26 June 2024

There will be further alignment between ASRS 2 and IFRS 2 in five areas:

1. Climate-related scenario analysis
2. Cross-industry remuneration metrics
3. Scope 3 GHG emissions
4. Financed emissions
5. Definition of ‘carbon credits.

Our previous article provides more detail on this.

When drafting ASRS 1 and ASRS 2, the Board decided it would revert to the baseline IFRS S1 and S2 for the following:

• The conceptual content of the baseline IFRS S1 and IFRS S2 will be incorporated into the Australian standards. This is instead of initial proposals merely referencing the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements.
• Paragraphs Aus6.2 of [Draft] ASRS 1 and Aus4.2 of [Draft] ASRS 2 will be omitted. These paragraphs proposed requiring an entity that assessed it has no material climate-related risks and opportunities to disclose that fact and explain how it came to this conclusion.¹
• The proposed requirement for an entity to refer to the Australian and New Zealand Standard Industrial Classification (ANZSIC) as the basis for identifying industries when voluntarily making industry-based disclosures will be omitted. ²
• The Aus paragraphs of the [draft] ASRS Standards that would have expressly permitted an entity to provide voluntary disclosures based on other relevant frameworks or pronouncements (e.g. the SASB Standards) will be omitted. Leaving out these Aus paragraphs will not prevent an entity from providing these voluntary disclosures if they so wish.
• Paragraph Aus60.1 of [draft] ASRS 1, which proposed requiring an entity to provide information in a manner that would enable users of general purpose financial reports to locate the disclosures, will be omitted.
• Paragraphs 69 and B48 of IFRS S1 will be included in the ASRS Standards to address interim-period climate-related financial disclosures provided by an entity.
• No special modifications for not-for-profit entities (NFPs). However, when applying ASRS S2, they will be required to refer to the definition of ‘primary users of general purpose financial reports' described in the Framework for the Preparation and Presentation of Financial Statements.
• No special modifications for public sector entities. However, after ASRS 1 and ASRS 2 have been finalised, the Board will consider the forthcoming IPSASB Exposure Draft on Climate-related Disclosures (expected to be published in October 2024) with a view to developing additional guidance to help NFP public sector entities applying ASRS 2.

Notes:

¹This requirement is instead included in the mandatory climate reporting Bill, which at the time of writing, was before the Senate.

²The Board decided to depart from the IFRS Sustainability Disclosure Standards and not require an entity to:

• Refer to and consider the SASB Standards and the IFRS S2 Industry-based Guidance, or
• Provide industry-based disclosures.

However, the Board will consider, as a separate project after the ASRS Standards have been finalised, the suitability of the SASB Standards, IFRS S2 Industry-based Guidance, and industry-based disclosure requirements.