What Australia’s first mandatory ASRS reporters learned

What Group 2 CFOs need to know now.

Australia’s first cohort of mandatory reporters under the Australian Sustainability Reporting Standard (ASRS) has completed its disclosures.

While ASIC and professional services firms have focused on the outputs of the first year of the reporting regime, Kate McHugh has surveyed Group 1 reporters on their experience of preparing their first mandatory climate disclosure.

Respondents included reporters across banking, financial services, superannuation, general insurance, media, IT, food manufacturing, construction, integrated marketing and manufacturing. Respondents hold senior sustainability, finance and risk roles.

The headline finding is that this is a substantially harder exercise than most organisations anticipated, and the difficulty is concentrated in places that are not intuitive. Most organisations begin with a focus on data and emissions metrics. The standout pain point was assurance.

The key lessons for Group 2 businesses

Start now.

The most consistent piece of advice across all respondents is to start early. The businesses that spent more than 12 months preparing their first disclosure were significantly more confident in their output and their ability to repeat it efficiently. Group 2 businesses whose reporting period began on 1 July 2026 are already inside their first disclosure cycle. Every month without a structured preparation process is a month of the reporting period without an auditable trail.

Build governance evidence from day one.

The finding that governance documentation was harder than expected is directly actionable for Group 2 businesses. This difficulty was not because board oversight was absent, but because proving it existed to auditors required more rigour than organisations anticipated. Governance frameworks, board reporting structures, and records of decisions made about climate risk need to be in place and documented throughout the reporting period, not assembled before the filing date.

Treat assurance as a project constraint, not a final step.

Assurance was the standout pain point for Group 1 reporters. The businesses that struggled most were those that engaged their assurance provider late and discovered requirements that had not been anticipated. For Group 2 businesses, early engagement with an assurance provider, understanding what evidence will be required, and building documentation to that standard from the outset materially reduces the risk of costly rework at the end of the process.

The compliance mindset is the most expensive mistake.

Multiple Group 1 respondents identified the compliance mindset – treating disclosure as a box to tick rather than a strategic exercise – as the primary barrier to getting value from the process.

The organisations that emerged with genuine strategic insight treated the process as a diagnostic. Their leadership engaged directly with what climate change means for the business model, its strategy, and its financial position. For Group 2 boards and executive teams, building that understanding early is not preparation for the disclosure. It is the disclosure.

Do not assume your advisors have done this before.

“Consultants were still on the learning curve” was among the most pointed observations from Group 1 practitioners. The ASRS advisory market is fragmented and uneven in quality. Before engaging external support, Group 2 businesses should verify that their advisors have direct experience delivering climate disclosures under assurance conditions, not just familiarity with the framework. Frustration was expressed with auditors who at times had differing interpretations of the standard and even changed their requirements during the process.

Scope 3 and financial quantification require early attention.

77% of Group 1 respondents cited Scope 3 as their primary priority for year two. Financial quantification of climate risks was consistently described as the hardest substantive content area. Both require data infrastructure, internal capability and often external expertise that takes time to build. Group 2 businesses that begin this work now will be in a materially stronger position than those that defer it.

For Group 2 businesses, whose first reporting period began on 1 July 2026, the Group 1 experience provides a guide to what lies ahead. The businesses that prepare deliberately and early will produce better disclosures at lower cost than those that do not.

The first ASRS disclosure is a substantial organisational undertaking, not simply a reporting exercise. AASB S2 is formally a financial reporting standard, but many organisations are still trying to build the organisational capability needed to make climate information behave like financial information. Real expertise and experience in climate related financial disclosures is genuinely scarce.

For Group 2 businesses with fewer internal resources than their Group 1 counterparts, choosing the right external support is not a secondary consideration.

The full report is available for download on Kate’s website.

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About the Author –

Kate McHugh brings in-house sustainability and climate experience to Australian businesses that don’t have it in-house. She has worked in large global companies, professional services, industry organisations and startups.

Kate has led sustainability and climate work, worked in supply chain and operations, built new programs and businesses, and worked with senior leaders through complex organisational change.

Link to full report: https://www.katemchugh.net/group-1-survey-report