Document ID: chunk:federal_register_of_legislation:F2024L01472:body:0:p79
Version: federal_register_of_legislation:F2024L01472
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AASB Board member, of being in 'the best interests of the private and public sectors in the Australian economy'.
DV2 In particular, I have concerns around the cost, the usefulness and the auditability of these reporting requirements. As far as I can discern, they have never been fully implemented or audited anywhere in the world, even for the largest reporting entities.
DV3 I am particularly concerned about the cost relative to benefit overall for smaller and not-for-profit entities in the private and public sectors, while recognising that identifying which entities are required to apply AASB S2 is beyond the role of the AASB.
DV4 I also have strong concerns around the requirements to disclose Scope 3 greenhouse gas emissions when the concepts of reporting entity control, as well as verifiability and usefulness to report users regarding allocating scarce resources to an entity and across entities, are not established in my view. My concerns in this regard are heightened for smaller and not-for-profit entities in the private and public sectors.
DV5 While AASB S2 contains some useful terminology and concepts, most of Australia's significant financial impacts of climate-related physical and transition risks, opportunities and resilience, are (and will be) evident through existing corporate reporting and analysis mechanisms. Moreover, Australia's large energy producers, consumers and greenhouse gas emitters are already captured through mandatory National Greenhouse and Energy Reporting Scheme obligations.
DV6 A further consideration for adoption of AASB S2 in the public sector is its different role and obligations in relation to climate-related financial risk. The public sector often acts as both the emergency first responder and the funder of last resort when adverse events occur in the community. The complexity of the circumstances and multitude of drivers of adversity response and recovery decisions, and therefore financial impacts, cannot be reliably estimated on a whole of jurisdiction scale – therefore, I do not consider they could sensibly fit within the requirements set out in AASB S2.
DV7 Sustainability reporting as required by the recent Corporations Act amendments and specified in AASB S2 represents a profound shift and cost escalation in Australian corporate reporting. However, the practical benefits of mandatory reporting in accordance with AASB S2 for users and the Australian financial system and environment have not yet been demonstrated or clearly articulated. When combined with acute shortages in reporting and auditing capability and capacity, which particularly affect smaller and not-for-profit entities in the private and public sectors, implementation of AASB S2 is, in my view, unworkable.

[1]  Throughout this Standard, the terms 'primary users' and 'users' are used interchangeably, with the same meaning.
[2]  This application guidance (paragraphs B1–B18) draws on the range of practice outlined in documents published by the Task