5 things Group 2 CFOs can do to get up to speed on Mandatory Climate Related Financial Disclosures.

The Group 2 ASRS 2 reporting period begins 1 July 2026 and many CFOs I speak to have been waiting for the reporting period to begin, before turning their attention to it.

The bad news is you are behind. The phased introduction of ASRS 2 reporting was designed to give companies time to prepare for this type of reporting; it as is a mindset shift which requires CFOs to work outside their comfort zone.

On the bright side, it’s entirely possible to catch up and derive value from the process.

I encourage CFOs I work with to approach climate related financial disclosures as a commercial exercise, rather than merely compliance. This process generates something more valuable than a filed report, although avoiding company liabilities to the tune of 10% of revenue, not to mention $1.5million director liabilities is good reason enough!

A commercial approach to climate related financial disclosures gives businesses an insight into the economic field the game will be played as the economy decarbonises and builds resilience for the impacts of baked in climate change.

Better visibility of operational risk. A clearer picture of which revenue streams are resilient, and which aren’t. Supply chain intelligence they didn’t have before. A more credible story for lenders and investors who are increasingly asking the right questions.

That’s not a byproduct of doing the work. It’s the point of it. The disclosure is evidence you’ve done the thinking. The thinking is where the value is.

Here is where to focus now >

1. Establish your governance framework

Governance is the foundation everything else rests on, and it’s the pillar most directly connected to commercial decision-making.

The ASRS governance requirement is evidence that the board has genuine oversight of climate risk, receives regular reporting from management, and integrates climate considerations into strategic decisions during the reporting period. Not a policy. Not a resolution. A process that is operating.

Getting governance right doesn’t just satisfy the standard. It means the board is asking better questions about risk and opportunity in a decarbonising economy. Which parts of the business model are exposed? Where are the opportunities? How is capital being allocated in light of what the business is learning? These are strategy questions, and the governance framework is what makes them part of the regular conversation at board level.

It is also where director liability lives. For the first three years of mandatory reporting, directors must declare that reasonable steps were taken to ensure compliance. The personal exposure for directors who get this wrong is up to $1.5 million each. Reasonable steps is not delegation. It is genuine oversight of a process directors understand well enough to stand behind.

2. Engage expertise that understands the standard

The right expertise doesn’t just keep you compliant. It changes what you see.

I’ve watched businesses work through scenario analysis for the first time and identify operational exposures they’d been carrying for years without knowing it. Supply chain dependencies that represented real revenue risk. Transition opportunities their competitors hadn’t moved on yet. That intelligence was always there. The ASRS process surfaced it.

The work needs to be produced by someone who understands what the standard actually requires, what assurance auditors will look for, and how to build a narrative that balances disclosure obligations with commercial sensitivity. A carbon accounting tool won’t produce that. A generalist sustainability consultant whose work has never been through assurance scrutiny won’t produce it either.

Capacity among practitioners with relevant experience is finite. The businesses that engaged early have access to it. Engaging now is the right decision.

3. Understand the actual scope of what’s required

The most consistent pattern I see among CFOs engaging with ASRS for the first time is the assumption that carbon metrics are most of the work. They aren’t.

Emissions metrics are one of four pillars. The strategy pillar requires scenario analysis of the business model under two climate trajectories. This is an assessment of operational risk, supply chain risk and revenue risk under materially different futures. Done properly, it tells you things about your own business model that you couldn’t see before. Which assets are exposed under physical risk scenarios. Which revenue streams depend on market conditions that may not persist. Where the transition economy is creating demand your business is positioned to meet.

The risk management pillar requires a documented process for identifying, assessing and managing climate risks integrated into how the business actually operates. Not a standalone exercise. A process that connects to existing decision-making.

Understanding the full scope is about making informed decisions about how to resource the work and what to expect from it.

4. Assess what you already have

Most businesses are further along than they think, and this is where CFOs are often pleasantly surprised.

Board papers where operational or market risk has been discussed. Risk registers. Strategic plans. Existing sustainability reporting. Energy and emissions data. Insurance assessments. Business continuity plans. Capital expenditure decisions that touch on physical risk or market transition. Any of these may contain content that qualifies as evidence once assessed against the standard by someone who knows what they’re looking for.

The assessment serves two purposes. It identifies what you already have that qualifies, and it maps precisely where the gaps are. Businesses that skip this step frequently discover late in the process that work they considered complete doesn’t meet the standard, or that they’ve duplicated effort on something they already had. Both are avoidable.

5. Build a realistic project plan

A credible first disclosure is evidence of a process that operated throughout the reporting period, not a document produced under pressure at the end of it.

The sequence matters. Governance first. Then scope and gap assessment. Then the substantive work on strategy and risk management. Then metrics. Then the disclosure narrative. Then assurance preparation and director sign-off. Each stage depends on the one before it. Targets set before the risk assessment is complete are analytically weak and visible to an auditor. A disclosure narrative drafted before the governance process is documented has no foundation.

The businesses that get this right come out with a board that understands the business in a way it didn’t before. A clearer view of where risk sits and where opportunity is emerging. A disclosure that reflects genuine thinking rather than minimum viable compliance.

The reporting period has started. The question is what kind of first disclosure your business produces, and what it tells your board, your lenders, your customers and your competitors about how seriously you took it.

That’s worth getting right.

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About the Author

Kate McHugh brings ASX level climate and sustainability expertise to Australian businesses who can’t afford Big 4 pricing but refuse to settle. She helps businesses align climate considerations (and broader sustainability) with the company’s purpose and priorities.

LinkedIn: https://www.linkedin.com/in/katemchughh/

Website: www.KateMcHugh.net