Defining key roles and responsibilities and engaging stakeholders early is key to not only compliance but driving success and sustainable performance.
26th November 2024
Mandatory climate-related reporting starts next year for many entities. Now is the time to review your stakeholder network and understand how you will define the key roles and responsibilities for reporting under ASRS (Australian Sustainability Reporting Standards) AASB S2. Early preparation will place you in the best position to successfully navigate data collection, reporting and assurance. In this article we explore how differing company departments and roles contribute, how collaboration is key throughout the process and where you may need to engage external experts to help you along the way to achieve your objectives and compliance requirements.
Many organisations find the process of assessing and reporting climate-related risk and opportunity beneficial to their business and to meet stakeholder expectations, but they also acknowledge it can be a big lift, especially in the early stages.
Gathering the necessary data and information and completing assessments for the report is extensive and it is likely to take longer than anticipated.
Your organisation can approach this challenge by starting early and clearly assigning roles and responsibilities among your teams, bringing in external support where needed to efficiently tackle the requirements.
This highlights why engagement and collaboration across teams and stakeholders are critical for success.
While current requirements are primarily ‘climate-first,’ they are far from ‘climate-only.’
With nature-related frameworks like the TNFD and other standards under development by the International Sustainability Standards Board (ISSB) expected to be adopted in Australia, businesses are recognising the need to prepare. Some are leveraging this moment to advance previously identified initiatives and align broader ESG priorities, anticipating these material areas will play a crucial role in their future strategies.
Ensuring clear roles, responsibilities, and adequate resourcing will be fundamental to navigating this complexity and delivering on evolving and long-term sustainability goals.
Navigating this new reporting regime will require a variety of stakeholders and inputs and a careful selection of key roles and responsibilities. A typical stakeholder group would include:
Mandatory climate-related reporting places ESG, in particular climate, as a priority for the senior leadership and sustainability team, but it is also high on the priority list for teams such as finance, risk and the Board.
Every organisation is different but there are some key roles who must be part of the organisation’s management and response to climate-related risk and opportunities, including navigating Australia’s mandatory climate-related financial disclosures to ASRS and in particular AASB S2.
If a sustainability team exists, it will generally lead the development and implementation of the organisation’s sustainability strategy.
The ASRS AASB S2 process for examining a business’s approach to managing and responding to climate change brings climate and sustainability increasingly into the core business strategy. Sustainability teams should continue to play an essential role in reporting in line with ASRS and AASB S2 but must be appropriately resourced.
They may be responsible for ensuring compliance with climate reporting standards and spearheading sustainability initiatives across the company and driving new opportunities and innovation. Sustainability Officers play a pivotal role in maintaining the integrity and ambition of the company’s environmental commitments.
Digital tools and reporting software like ESG platform Mero and GHG accounting tools like RouteZero can also help sustainability managers and teams engage and collaborate with other stakeholders. These platforms streamline data collection, enhance transparency, and simplify collaboration, making it easier for teams to align and report effectively on sustainability goals.
The finance team, generally led by the Chief Financial Officer (CFO), will play a critical role in overseeing financial risks and integrating climate-related financial disclosures. The CFO should be responsible for aligning financial reporting with climate-related disclosures and ensuring that these disclosures meet investor communications effectively.
Key requirements are to analyse the effects of climate-related risks and opportunities on an organisation’s financial prospects and business strategy, including the disclosure of any immediate impacts in the current reporting period, but also the anticipated impact over a short-, medium- and long-term horizon.
Financial analysts will play a critical role in conducting these analyses with other departments.
The risk team will be instrumental in identifying, assessing, and mitigating climate risks and is key to implementing governance procedures and policies. Risk Officers are tasked with embedding climate risk into the overall risk management framework, ensuring that the organisation is prepared to handle potential environmental and regulatory changes.
Materiality is one of the key elements when it comes to both understanding climate-related risks and opportunities and the disclosure of any such risks and opportunities. For this, thresholds will need to be built into current risk policies and frameworks, led by risk management teams.
The Board is responsible for overseeing the integration of climate risks into broader business strategy, ensuring compliance with mandatory reporting, and aligning efforts across departments like ESG, Finance, and Risk.
It is fundamental that the Board and Executive are upskilled and engaged early.
The Board and Executive Committee should ensure they have a good understanding of what is required to comply with mandatory climate-related financial disclosures and ASRS, and how to support their team.
They must work closely with senior leadership to ensure robust governance structures are in place and that the organisation is adequately prepared for regulatory scrutiny.
Additionally, they should regularly review climate risk management processes, ensuring that clear reporting lines and accountability are established across the stakeholder groups.
The Directors’ Declaration is a critical part of the Sustainability Report that must be signed off by the Board. The declaration confirms that the climate-related disclosures (such as the climate statement and notes) comply with AASB S2 and the Corporations Act.
For the first three years, the declaration is qualified, requiring directors to confirm that they have taken “reasonable steps” to ensure compliance. After this transitional period, the declaration will become unqualified, meaning the directors must attest that the report fully complies with the standards. Directors are also accountable for forward-looking statements, including climate scenarios and Scope 3 emissions with finanical penalties for non compliance.
Assurance requirements are being phased in over time, which means that the sustainability report may not be supported by the same level of rigorous audit as financial statements. The Board should take early steps to understand what level of assurance will be undertaken and consider options for voluntary assurance.
Collaboration across various departments including those listed above, as well as marketing, communications and HR is not just beneficial; it’s essential.
Many organisations have already started that collaboration process and a close connection between CFO’s and CSO’s has become the norm.
On a departmental level, the integration of sustainability into the broader corporate strategy requires close communication and cooperation between finance, risk management, legal and sustainability teams.
For instance, finance professionals must work closely with sustainability experts to align financial and environmental reporting, as well as analysing the financial impacts from climate-related risks and opportunities.
Finance will also be closely involved in data procurement related to measuring emissions and other sustainability related metrics. Similarly, risk managers need to collaborate with the sustainability team to identify and mitigate potential environmental risks that could impact the business.
This cross-functional collaboration ensures that all aspects of climate reporting are thorough and compliant with regulatory standards. It also facilitates a more holistic approach to sustainability, where strategic decisions are informed by diverse perspectives within the company.
By breaking down silos and encouraging a culture of teamwork your organisation can more effectively respond to the challenges of climate change, turning your compliance efforts into opportunities for innovation, improved business resilience and leadership while driving sustainable performance.
Engaging external consultants and sustainability experts can significantly enhance your company’s ability to navigate the complexities of reporting to the ASRS.
Knowing when and how to involve experts is crucial. They will provide you with specialised assessment and reporting expertise, ensuring accurate and comprehensive compliance. Leveraging their knowledge will not only helps you to fulfill immediate reporting needs, but also upskill your internal team, building capacity and empowering them with the knowlege to drive further initiatives. This partnership fosters a more ambitious and confident approach to sustainability, positioning your organisation for long-term success to drive innovation, opportunities and compliance.
When it comes to training and capacity building within your organisation, it is important to focus on developing internal training programs to enhance your team’s understanding of climate reporting requirements.
Additionally, strategies for building capacity within teams to handle future climate reporting challenges are essential. Preparing well-defined roles and responsibilities among internal and relevant external stakeholders will be key to navigating the requirements of the upcoming ASRS mandatory climate disclosures in a timely fashion, to ensure you are ready to achieve the required milestones on your journey through the reporting tasks to achieve compliance.
By fostering a culture of collaboration and continuous learning, your organisation can enhance your ability to manage climate-related issues effectively.
A Guide to Mandatory Climate Reporting in Australia
Under the new mandatory climate reporting rules in Australia and AASB S2, companies must prepare an annual ‘Sustainability Report’ which forms part of annual reporting – as part of their Annual Reporting under Ch2M Corporations Act.
The Sustainability Report consists of:
The Climate Statement must include information on climate-related risks and opportunities in line with AASB S2. This requires information including on:
This isn’t a tick-box exercise for compliance; it’s a fundamental reporting shift that demands collaboration, accountability, and commitment. Defining your key roles and responsibilities for reporting under ASRS and engaging with stakeholders early and consistently will help you more holistically embed sustainability into your core business strategy, and take a vital step toward managing risk, uncovering opportunities, driving sustainable performance and helping shape a sustainable future.
Anthesis is among a select group of firms with extensive expertise in all aspects of climate disclosures, supported by advanced digital tools and software. Our experts understand the complexity required for compliance and have the skills to drive long-term resilience and sustainable performance for your business.
Anthesis experts can guide you through the full process of reporting to the Australian sustainability standards or assist with particular elements of reporting such as analysing your climate-related risks and opportunities, scenario analysis, Scope 3 reporting and climate transition planning. We can guide you on how to integrate outcomes into strategic plans and risk management processes, ensuring you’re prepared for compliance. Our digital solution Mero is designed to align with ASRS disclosures, providing a streamlined solution for data collection and management. It ensures transparency, data integrity and rigour, supporting your reporting processes and assurance requirements.
As technical experts and trusted advisors to some of the world’s most well-known companies for over a decade, we’re here to help you through this new era of reporting.
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