Delivering tailored climate disclosure programs

Setting up and managing an effective climate disclosure program

Australia’s climate disclosure deadlines are fast approaching, and expectations of what needs to be disclosed are due to increase over time. From FY28 onwards, Directors will be fully responsible for all entities, regardless of their group classification. To meet these expectations, it's important to have a well-planned and considered climate disclosure program that manages resources effectively based on the risks involved.

Source: Baringa

1. Climate readiness assessment

A readiness assessment is the logical first step to gauge your organisation’s position against ASRS S2 requirements and broader climate disclosure expectations. By examining existing capabilities, governance structures, and processes, you can identify gaps and understand the scope of the improvements needed. This exercise typically includes engaging stakeholders across the business to confirm priorities and create a high-level roadmap. The resulting insights and initial cost estimates help secure internal budget and momentum for the broader climate program. 

Key outputs: 

• Gap to target: Identifies how current capabilities and processes fall short of ASRS S2 requirements. 
• Roadmap: Offers a high-level sequence of initiatives, guiding priorities and fosters engagement across the organisation. 
• Early costings: Provides ballpark financial estimates to unlock internal budgets and secure stakeholder buy-in. 

Discover how we helped a leading retail superannuation fund unlock budget to enhance its climate disclosure capabilities through a climate readiness assessment

2. Program plan

Building on the readiness assessment findings, the program plan translates the high-level roadmap into a detailed sequence of sub-projects, timelines, and interdependencies. It clarifies who will execute each task, the costs involved, and the required resources—whether from existing teams, new hires, contractors, or external consultants. By establishing clear workstreams, budget allocations, and accountability, the program plan ensures a structured approach to delivering the necessary improvements while managing and mitigating risks. 

Key outputs: 

• Program plan – Translates the roadmap into actionable sub-projects with defined timelines and milestones. 
• Resourcing strategy – Decides whether to use in-house teams, recruit new talent, or engage external support for each workstream. 

Understand how we helped turn a one-page climate disclosure roadmap into reality for a superannuation fund

3. Target Operating Model

Once your organisation understands the program deliverables and resources, the Target Operating Model (TOM) defines a cohesive, long-term structure. It clarifies the capabilities needed for effective climate disclosures, assigns responsibilities, and outlines how different business functions collaborate under a unified governance framework. By specifying roles, accountabilities, and performance measures, the TOM ensures climate considerations are integrated into everyday operations, beyond the initial compliance work.

Key outputs: 

• Target state capabilities – Specifies the specialised functions and skill sets needed for effective long-term climate disclosure management. 
• Organisational model – Defines the roles, responsibilities, and reporting structures to integrate climate work with broader business operations.
• Program governance – Sets up oversight mechanisms and performance indicators to maintain momentum and ensure accountability after implementation. 

Learn how we worked with a large superannuation fund gained a competitive edge with a robust ESG operating model

Three key workstreams for climate disclosure program success

Successfully implementing your climate disclosure program involves focusing on three key areas. Each one is crucial for not only meeting disclosure requirements but also building long-term resilience in climate reporting.

1. Core disclosure pillars – These foundational activities are key to developing the skills needed to produce and report climate-related information, ensuring meaningful content for disclosures. They form the backbone of your disclosure program, driving compliance with reporting standards.
2. Critical enablers – These essential activities ensure your disclosures are credible, organisational change is effectively embedded, risks are minimised, and reporting is accurate. These activities are vital for supporting your target operating model and typically include training and setting up data and systems.
3. Pathway to disclosure – As your disclosure deadlines near, this final set of workstreams ensures you’re ready for reporting. Activities in this phase typically focus on securing assurance and finalising disclosures, providing Board comfort in the quality and credibility of reported information.

By organising your climate disclosure program around these three workstreams, you create a clear roadmap for success. This approach balances compliance, operational readiness, and long-term sustainability in reporting.

1. Core disclosure pillars

These core activities are essential for developing the skills needed to generate and report climate-related information. Without them, there wouldn’t be any meaningful content to disclose.  

a) Identifying material climate-related risks and opportunities 

Identifying climate-related risks and opportunities is crucial for AASB S2 and should be an early focus in your disclosure program. By assessing the financial impacts of climate change – often through a financial materiality assessment – you can prioritise resources effectively. This involves evaluating different climate scenarios to understand their influence on strategy, risk management, and financial performance. Done well, it refines your program’s scope and links tasks like scenario analysis, governance enhancement, and metrics selection. 

How it supports disclosure: 

See how we helped a global insurer future proof their ESG materiality assessment

b) Climate change scenario analysis

Scenario analysis is crucial for assessing your organisation’s exposure to various future outcomes, including risks and opportunities. Under AASB S2, entities must include at least one scenario aligned with lower warming thresholds (1.5°C) and another for more severe warming (well above 2°C). Additional scenarios like a “base-case” reflecting likely policy and technology outlooks, can be added as needed. Since scenario analysis is complex and data-intensive, AASB S2 suggests a phased approach: starting with qualitative assessments and progressing to quantitative modelling as your organisation matures and data availability improves. 

How it supports disclosure: 

Discover how you can maximise return on investment from climate scenario analysis

c) Climate transition plan

Climate transition plans are essential for managing climate risks, opportunities, and decarbonisation goals within your business strategy. They detail the steps your organisation will take to succeed in a lower-carbon economy, including operational and investment decisions. The Transition Plan Taskforce (TPT) is the leading framework for transition planning, and as of June 2024, the IFRS Foundation oversees its disclosure guidance. This will shape Australian transition planning expectations, with more details expected in 2025. Aligning with these standards provides future-proofing, shows accountability under AASB S2, and integrates climate considerations into your broader business strategy. 

How it supports disclosure: 

Explore more tips on integrating climate into strategy and decision making

Read how we helped navigate the unknown for a superannuation fund in climate-related transition planning

d) Risk management framework integration

After identifying climate risks, they should be integrated into the organisation’s risk management framework with the same rigor as financial or operational risks. This may involve updating risk categories, adjusting risk appetite, and implementing controls to cover physical and transition climate threats. By embedding climate considerations into governance, escalation procedures, and internal reporting, organisations can better understand their risk profile and allocate resources to mitigate climate-related vulnerabilities. 

How it supports disclosure: 

e) Emissions measurement

Accurate emissions measurement is crucial for credible climate disclosures and net-zero commitments. It provides the data needed to set targets, track progress, and show impact. Emissions data, especially Scope 3, often faces higher scrutiny due to its complexity. Without a robust measurement approach organisations risk regulatory misalignment, stakeholder scepticism, and reputational damage.

How it supports disclosure: 

f) Target setting

Setting a formal climate target is a major decision for boards and executives, requiring careful evaluation of strategy, feasibility, and stakeholder expectations. Organisations must ensure a credible pathway to achieving their targets, whether for Scope 1, 2, or the more complex Scope 3 emissions. This involves assessing changes to products, suppliers, and customer engagement. Unrealistic targets can harm morale and confidence. By balancing ambition with feasibility, organisations can maintain trust and resilience. 

How it supports disclosure: 

See how we supported an Australian bank in its race to net zero

2. Critical enablers

These core activities ensure your disclosure program is credible, integrated into the organisation, and aligned with long-term needs. 

a) Training

Training on mandatory climate disclosures equips staff to handle complex reporting requirements and regulatory expectations confidently. Without it, teams risk misreporting, greenwashing, and penalties. Clear understanding of roles fosters accountability, strengthens data integrity, and ensures leadership can manage climate-related financial risks effectively. 

Discover how we upskilled a global reinsurer’s board for new climate regulation and tailored a specialised climate training program for government agencies.

b) Climate policies and procedures

Climate policies and procedures, though less flashy than bold targets, are crucial for successful climate disclosures. They turn board-approved ambitions into concrete rules, ensuring consistent decisions across all areas. By defining roles, escalation channels, and compliance checks, these policies shape the organisation’s risk appetite and strategy, laying the foundation for reliable disclosures and real progress. 

c) Climate data and systems

Effective climate reporting relies on robust data and systems. Without them, organisations can’t accurately manage or disclose climate risks and opportunities. Reliable systems ensure that data is collected, structured, and integrated, enabling transparency and consistent reporting. Without this foundation, reporting becomes fragmented and error-prone, increasing compliance risks and undermining confidence. Establishing strong data and systems upfront creates a reliable framework that meets regulatory requirements and supports long-term resilience in the face of future change. 

3. Pathway to disclosure

The final step focuses on confidently meeting disclosure deadlines. Securing assurance and finalising disclosures ensures your reporting is accurate and compliant. 

a) Supporting assurance

Preparing climate disclosures for the first time can be overwhelming, but starting with assurance readiness reduces risk, cost, and effort. Embedding this mindset early avoids last-minute issues, and costly rework, streamlining reviews and verification. This approach enhances credibility, efficiency and compliance with evolving regulatory expectations. 

Contact us to receive our complimentary Basis of Preparation document, designed to help you proactively prepare your disclosures for assurance readiness

b) Drafting disclosures

Creating credible climate-related financial disclosures requires expert input from the start, both in drafting and review. Applying ASRS S2 requirements accurately can be complex, but expert involvement ensures clarity, usefulness, and avoids greenwashing. Integrating expertise helps produce disclosures that are compliant and strategically strong, building trust with investors, regulators, and stakeholders.