Why managing climate risk is now strategic, not optional
Australia’s climate-related disclosure requirements are evolving quickly. Under AASB S2, many large organisations, particularly Group 1 reporters, are already embedding climate-risk management and disclosure systems.
Futureproof has been helping clients prepare for this transition for several years. Our team has supported companies on TCFD-aligned climate-risk assessments and disclosures since the framework’s early adoption in Australia, and are now advising a number of Group 1 reporters implementing AASB S2.
AASB S2 builds on the globally recognised TCFD framework and requires companies to disclose governance, strategy, risk-management, and metrics and targets for climate-related issues, a structure that now underpins mandatory reporting in Australia.
What we’ve learned through this work is highly relevant for the next wave, Group 2 and 3 reporters, who will soon be required to disclose climate-related information and need to start building capability now.
At Futureproof, climate readiness means proactively identifying, assessing and mitigating climate risks across governance, operations and disclosure. Developing this capability helps companies anticipate and manage both transition and physical risks, strengthen governance, and meet emerging investor and regulatory expectations. Proactively identifying, assessing and mitigating climate risks helps companies:
- Reduce regulatory and compliance exposure
- Strengthen governance and investor confidence
- Build resilience to both market and environmental change
Why climate readiness matters for Group 2 and 3 reporters
Australia’s climate-reporting framework is being implemented in three stages, with Group 2 and 3 reporters coming into scope over the next few years. Starting early allows these organisations to learn from the experience of Group 1 reporters and build capability at a manageable pace.
For Group 2 and 3 reporters, the challenge is not just producing a compliant disclosure, it’s building the systems, evidence and assurance pathways that audit partners and ASIC will expect. Companies that begin early can spread the workload, embed learning and demonstrate credible progress rather than rushing when the compliance clock starts ticking.
Climate readiness is therefore both a compliance requirement and a strategic opportunity to align risk, governance and performance.
AASB S2 at a glance – key disclosure requirements:
- Governance: how the board and management oversee climate-related risks and opportunities.
- Strategy: how climate risks and opportunities influence business strategy and financial planning.
- Risk management: processes for identifying and managing material physical and transition risks.
- Metrics & targets: Scope 1, 2 and 3 emissions, progress toward targets, and use of offsets.
AASB S2 is mandatory, based on the TCFD and IFRS S2 frameworks. External assurance will move from limited to reasonable over time.
A staged approach to building climate readiness
Futureproof previously supported Ramelius Resources, an Australian gold producer, to integrate climate risk and reporting practices across its operations.
This multi-year engagement reflects the same structured approach now being applied to Group 1 reporters and offers a useful roadmap for organisations that will follow.
| Phase | What we did | Why it mattered |
| Year 1 – Benchmarking & gap analysis | Conducted peer benchmarking against industry disclosures. Completed a detailed gap analysis against TCFD recommendations. | Established a baseline of transparency and identified improvement priorities. |
| Year 2 – Climate risk assessment | Identified transition and physical risks. Assessed causes and business impacts. Integrated findings into the Enterprise Risk Register and strategic planning. | Embedded climate risk within core risk governance and management processes. |
| Year 3 – Scenario analysis & Scope 3 inventory | Developed forward climate scenarios. Assessed organisational resilience under each pathway. Built Scope 3 emissions inventory across the value chain. | Strengthened resilience planning and increased value chain emissions visibility |
| Year 4 – ASRS readiness & alignment | Undertook a gap analysis against emerging ASRS requirements. Mapped data, controls and disclosures to AASB S2 expectations. Prepared guidance for future assurance and reporting cycles. | Positioned the company ahead of mandatory disclosure and assurance expectations. |
This phased approach shows how organisations can progress from awareness to integration, building capability year by year rather than treating climate disclosure as a one-off compliance task. While this process unfolded over several years, many of these steps can now be accelerated as frameworks and guidance are more clearly defined for Group 2 and 3 reporters.
Futureproof perspective: Key lessons for upcoming reporters
Our experience with Group 1 clients highlights several lessons that Group 2 and 3 reporters can apply immediately:
- Establish a cross-functional climate-risk working group.
Bringing together representatives from finance, risk, sustainability and operations ensures climate responsibilities are clearly defined and embedded across the business. A small, empowered taskforce is the most effective way to coordinate readiness activities and maintain momentum. - Start with governance
Under AASB S2, companies must disclose how the board oversees climate risk — including processes, responsibilities, and links to executive remuneration. Embedding this governance early creates credibility and readiness for assurance. - Build capability before you need it.
Establish data processes, documentation and internal controls early as these take time to mature and will be critical once limited or reasonable assurance applies. - Treat scenario analysis as strategy.
Scenarios reveal vulnerabilities and inform long-term decisions; they’re not just disclosure requirements. - Integrate climate risk into enterprise risk management.
Alignment with existing risk processes and systems is key to efficiency and credibility.
Looking ahead
Group 2 and 3 reporters have a valuable advantage: they can learn from the groundwork already laid by Group 1 companies.
By taking early, structured action now, these organisations can strengthen resilience, meet disclosure expectations under AASB S2, and build trust with investors and stakeholders.
As assurance requirements tighten, companies that embed climate-risk management early will face smoother verification and lower compliance costs.
Futureproof’s phased approach helps clients move from awareness to action — ensuring climate risk is managed strategically, not reactively.
Next step
Preparing for AASB S2?
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For a detailed overview of reporting thresholds, timelines and disclosure requirements, see our ASRS Climate Readiness Guide.