March 1, 2025
Australian superannuation funds are entering a new regulatory environment with the introduction of AASB S2 – Climate-related Disclosures. This framework mandates detailed climate-related reporting structured around four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Effective compliance requires precise, granular emissions data at the holding level.
Reporting timelines
AASB S2 implementation timelines are phased:
Group 1 entities: Reporting from annual periods beginning 1 January 2025.
Group 2 entities (including super funds): Reporting commences from 1 July 2026, covering the 2026-27 financial year.
Group 3 entities: Reporting from 1 July 2027.
Initially, limited assurance is required, transitioning to reasonable assurance by 2030.
Importance of holding-level data for compliance
Granular, holding-level emissions data is crucial for compliance across key disclosure pillars:
Strategy: Accurate holding-level data enables precise scenario analysis, supporting informed investment decision-making.
Risk management: Detailed data is essential to demonstrate comprehensive risk identification, assessment, and management.
Metrics & targets: Reliable, verifiable emissions data at the holding level underpins robust emissions metrics calculation and reporting, meeting regulatory expectations.
Current best practices
Examples of best practices include:
Super funds conducting comprehensive scenario analyses at the investment level, clearly aligning with AASB S2 requirements.
Reporting financed emissions within private debt portfolios, enhancing transparency and credibility.
Insights from New Zealand’s climate disclosure regime
New Zealand’s Climate-related Financial Disclosures (CRD) regime, effective from January 2023, provides valuable insights:
Emphasizes fund-by-fund disclosures, aligning with AASB S2’s approach to granular portfolio accountability.
Highlights the importance of balancing detailed disclosure requirements with market innovation and operational feasibility.
Indicates the necessity of structured, consistent data collection and verification systems to ensure compliance and market trust.
Pathzero's role in supporting regulatory compliance
Pathzero addresses these compliance challenges by:
Collecting comprehensive holding-level emissions data, enabling detailed scenario analysis and risk management.
Facilitating precise, verifiable emissions metrics and disclosures aligned with AASB S2 requirements.
Automating data aggregation and reporting processes to streamline compliance and assurance readiness.
Through robust, integrated data solutions, Pathzero helps Australian superannuation funds effectively navigate and fulfil their regulatory obligations under AASB S2, ensuring transparency, compliance, and strategic clarity.