Are Your Emissions Boundaries Aligned for AASB S2 Compliance?

Aligning Emissions Boundaries for AASB S2 Compliance

As organisations prepare climate disclosures under Australia’s Sustainability Reporting Standards (ASRS), one area coming into increasing focus is emissions boundary alignment under AASB S2.

ASIC’s Regulatory Guide 280 (RG 280) confirms that sustainability reporting is now a statutory requirement under the Corporations Act and that climate-related financial disclosures, including Scope 1 and Scope 2 emissions from Year 1 and Scope 3 emissions from Year 2, must be included within the mandatory sustainability report.

The guidance also highlights the importance of presenting climate-related financial information in a consistent and comparable way to support informed decision-making by report users.

Why Emissions Boundaries Matter

Under AASB S2, disclosures must clearly define the emissions boundary, including exactly which sources of emissions are included and why.

In practice, organisations should ensure that:

• The reporting entity’s consolidation approach and operational boundaries are consistently applied.
• Scope 1, Scope 2 and Scope 3 emissions disclosures align with those boundaries and are clearly explained.
• Any differences between previously disclosed emissions data, such as information published on websites or in voluntary reports and programs, and emissions disclosed within the sustainability report are reconciled and appropriately justified.

Accuracy Will Improve Over Time

ASIC’s guidance recognises that:

• The accuracy of emissions estimates may change over time, particularly for Scope 3 emissions.
• Estimation techniques are expected to improve as data quality and availability increase.
• Many organisations will initially rely on secondary data sources, such as industry averages, to estimate Scope 3 emissions, with reliance on secondary data expected to decrease as higher-quality primary data becomes available.

Against this backdrop, differences in emissions figures between reporting periods or across disclosure channels do not necessarily indicate an issue, provided they are transparent, explainable and consistently presented.

Are Your Disclosures Consistent?

Differences in emissions disclosures commonly arise due to:

• Changes in boundary definitions.
• Updated data sources or methodologies.
• The inherent complexity of Scope 3 emissions.
• Differences between voluntary frameworks and statutory reporting requirements.

What matters is not that figures remain static, but that organisations can clearly explain how and why emissions information has changed and ensure climate-related information disclosed outside the sustainability report does not contradict statutory disclosures.

What Organisations Should Do Now

• Review how emissions boundaries are defined and applied across disclosures.
• Compare historically reported emissions with emissions included in the latest or upcoming AASB S2 disclosure.
• Document and explain any changes in boundaries, methodologies or data sources.
• Ensure consistency between sustainability reports and other public disclosures.

If you would like support with emissions boundary reconciliation, greenhouse gas accounting and verification of emissions disclosures ahead of your next sustainability report, our team at Pangolin can help ensure reporting is consistent, credible and defensible.