Climate-related disclosure reporting

Why this is important

In September 2024, the Australian Accounting Standards Board (AASB) issued a mandatory sustainability reporting standard (AASB S2 Climate-related Disclosures) that applies to reporting periods beginning on or after 1 January 2025. This reporting standard includes how entities need to calculate and report their direct and indirect greenhouse gas emissions. Entities will phase into the new requirement from 1 July 2024 to 1 July 2027 based on their size or level of emissions.

Under changes to the Corporations Act 2001 (Cth), large corporations need to disclose information about their greenhouse gas emissions and how they manage climate-related risks and opportunities. We presently understand that these changes apply to a small number of state-owned companies.

On 28 January 2025, the Australian Auditing and Assurance Standards Board (AuASB) approved the adoption of the International Standard on Sustainability Assurance 5000 General Requirements for Sustainability Assurance Engagements in Australia. AuASB Standard on Sustainability Assurance 5000 General Requirements for Sustainability Assurance Engagements (ASSA 5000) will apply to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025.

For mandatory climate reporting under the Corporations Act 2001 (Cth), ASSA 5000 will be subject to the phasing in of limited and reasonable assurance under AuASB Australian Standard on Sustainability Assurance 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001.

The Department of Treasury and Finance has required disclosure of information on aspects of energy and resource consumption and environmental performance in agencies' annual reports of operations since July 2022 under Financial Reporting Direction 24. However, it is yet to establish requirements for how the wider public sector should apply AASB S2 Climate-related Disclosures, although it has signalled that greater scrutiny on climate impacts and increased disclosures are coming.

While not subject to the Corporations Act 2001 (Cth), Victoria's water corporations nonetheless have reported climate-related information under the National Greenhouse and Energy Reporting Scheme. This means they have a mature greenhouse emissions reporting model. 

By assessing the completeness and reliability of water corporations' reporting, our engagement could help inform the Department of Treasury and Finance's approach to AASB S2 Climate-related Disclosures. It will also provide assurance that the environmental information disclosed by these bodies is reliable.

What we plan to examine

We plan to examine if Victoria's water corporations' climate-related disclosure reporting is complete and reliable.

Who we plan to examine

Greater Western Water

Melbourne Water

South East Water

Yarra Valley Water