What does ASRS S2 governance disclosure require?

Under AASB S2, every entity required to report under ASRS must disclose four things about climate governance: the body or individuals responsible for oversight, management's role in assessing and managing climate risk, how the board and management are kept informed, and how climate risk is integrated into governance processes. These disclosures require documented evidence, not a statement of intent.

Governance is one of the four pillars of AASB S2, alongside strategy, risk management, and metrics and targets. It is often the last pillar organisations address and the hardest to evidence quickly, because it cannot be calculated. Either the board has a documented process for overseeing climate risk, or it does not.

The four governance disclosure elements under AASB S2

AASB S2 Clause 6 sets out the governance disclosure requirements. There are four connected elements, each of which must be addressed in the climate statement.

1. The body responsible for overseeing climate risk

The disclosure must identify the specific body: the full board, the audit and risk committee, or an equivalent governing body, that holds responsibility for overseeing climate-related risks and opportunities. The standard does not mandate which body holds this role, but the assignment must be explicit and written into that body's terms of reference. A general statement that "the board oversees climate risk" is not sufficient without a named locus of accountability.

The disclosure must also cover how climate risk sits within that body's mandate: whether it is a standing agenda item, how climate competency is maintained or developed, and how the board factors climate into major decisions.

2. Management's role in climate governance

AASB S2 distinguishes between board-level oversight and management-level execution. The governance disclosure must cover both. Management's role, including who is accountable, how climate risks are assessed at the management level, and how findings are escalated to the board, must be documented separately from the board's oversight role.

This is a gap in most early-stage ASRS disclosures. Organisations that address the board's role but leave management accountability undocumented will have an incomplete governance disclosure.

3. How the board and management are kept informed

The standard requires disclosure of how the governing body receives information about climate-related risks and opportunities: the frequency of reporting, the format, and the source. This includes what monitoring processes exist at the management level and how that information reaches the board in a usable form.

The board must also demonstrate access to the expertise needed to interrogate what it receives, either through directors with relevant skills or through external sources. Where skills gaps exist, the board's plan to address them should be documented.

4. Integration into strategy, risk management, and remuneration

Governance disclosure under AASB S2 extends to how climate risk is factored into strategic planning and major capital decisions. The board must be able to show that climate considerations are embedded in existing governance processes, not run as a parallel track. If climate-related performance metrics are linked to executive remuneration, that linkage must be disclosed. If no such link exists, that is not a gap, and the absence does not need to be explained.

What "demonstrating oversight" means in practice

The distinction between having a governance process and being able to demonstrate one is where most organisations find themselves exposed. Under AASB S2, a board cannot simply assert that it oversees climate risk. The disclosure must rest on evidence an assurance provider can test against specific clauses.

In the early years of ASRS, limited assurance applies. This means a defensible, structured approach is sufficient: perfection is not required. But defensible means documented. A board that discusses climate risk regularly but keeps no record of those discussions, and whose committee charter does not name climate risk, has nothing for an auditor to rely on.

The evidence file assurance providers look for

When reviewing a governance disclosure under AASB S2, assurance providers consistently look for the same core artefacts:

• A committee charter or board mandate that names climate risk explicitly
• A board skills matrix, with a documented plan to address any climate-related gaps
• An ownership diagram showing accountability from board to management level
• A record of how often and in what format the board receives climate information
• Evidence that climate is considered in strategy reviews and major capital decisions
• Sign-off timing mapped to the reporting calendar

None of these documents need to be created from scratch. In most organisations, the governance infrastructure already exists: the work is to update existing charters, extend the skills matrix, and formalise the information cadence. What matters is that each artefact is current, specific to climate risk, and linked to the clauses it evidences.

Key terms

• AASB S2: The Australian Accounting Standards Board's mandatory climate-related financial disclosure standard. Equivalent to ISSB S2, it requires disclosure under four pillars: governance, strategy, risk management, and metrics and targets.
• Governance pillar: The section of AASB S2 (Clause 6) covering how an entity's board and management oversee climate-related risks and opportunities.
• Limited assurance: The assurance level applied in the early years of ASRS, requiring a defensible and structured approach rather than full completeness.
• Terms of reference: The governing document for a board committee, which must explicitly name climate risk to satisfy governance disclosure requirements.
• Artefact: A document or record produced as part of a governance process, such as a board minute, charter, or skills matrix, that an assurance provider can examine as evidence of oversight.

Frequently asked questions

Does governance disclosure apply to every entity required to report under ASRS?
Yes. All entities preparing an ASRS-compliant climate statement, across Group 1, 2, and 3, must disclose the four governance elements under AASB S2 Clause 6. There is no size-based exemption for the governance pillar.

Can a committee handle climate governance instead of the full board?
Yes. AASB S2 allows oversight to sit with the full board, the audit and risk committee, or an equivalent governing body. What matters is that the responsibility is named explicitly in that body's terms of reference, so accountability is unambiguous.

What if our board oversees climate risk informally but has nothing written down?
An undocumented process is not something an assurance provider can rely on. The starting point is updating the relevant committee charter to name climate risk and establishing a formal information cadence. Both steps are straightforward if the underlying governance intent is already there.

Does AASB S2 require climate metrics to be linked to executive remuneration?
No. Remuneration linkage is not mandatory under AASB S2. If a link exists, it must be disclosed. If no link exists, there is no compliance gap and no requirement to explain the absence.

Where does management's role get disclosed separately from the board's?
AASB S2 Clause 6 requires both to be addressed in the climate statement. Management's role in assessing and managing climate risk is a distinct disclosure from the board's oversight role, even if both are covered within the same governance section of the report.

For a detailed breakdown of the evidence board directors need to prepare, the skills matrix, and the disclosure structure, see ASRS board readiness and climate governance for directors. For organisations ready to structure their governance disclosure, book a call with the Trace team.

Trace is a climate reporting platform specialising in ISSB and AASB standards, helping businesses navigate mandatory climate disclosure with clarity and confidence.