Our latest review of AASB S2-aligned disclosures provides one of the most comprehensive assessments of climate reporting maturity in the Australian market. Based on 159 climate reports from ASX-listed entities released by 4 September 2026, this analysis reveals that Australian organisations have made significant progress in climate governance and scenario analysis, but many continue to struggle with translating climate assessments into financial decision making, capital allocation and measurable business outcomes. 

Climate reporting quality continues to improve 

As detailed previously, we are using our AI engine which assesses reports on both the completeness and level of detail in the disclosure. Across the reports analysed, the average disclosure score was 79%, indicating that many organisations have achieved a solid foundation for climate reporting. Governance remains the strongest reporting pillar, achieving an average score of 91%, reflecting widespread board oversight, management accountability structures and integration of climate matters into enterprise risk management. By contrast, Metrics and Targets remains the weakest area, averaging 69%, and continues to show the greatest variation in reporting quality between organisations. Factors that impact this result most are limited Scope 3 disclosures, limited reporting of targets and their linkage to transition planning, and a dearth of industry specific metrics.   

For business leaders, this suggests that governance practices are becoming standardised, while reporting of performance outcomes, targets and financial impacts remains a significant differentiator. 

Scenario analysis has become mainstream 

Our deep dive this time was into how companies used scenario analyses. We have seen a rapid maturation of this topic since the first reports hit the market early this year. Our research found broad adoption and some sophistication. Companies are increasingly using the two diverse climate futures required by the standard to test strategy, risks and long-term resilience. Only a very limited number of companies use more than the required two scenarios. 

However, there is a crucial observation: scenario analysis is being used primarily as a risk identification and resilience testing tool, rather than informing evaluation of financial outcomes. Organisations are generally effective at describing how physical and transition risks may evolve under different climate futures, but they rarely link these findings to forecast revenue, profitability, asset valuations, cash flow or enterprise value impacts.   

This represents perhaps the largest opportunity for improvement across Australian corporate reporting. 

The market has moved beyond climate risk identification 

One of our most important conclusions is that climate reporting challenges have fundamentally shifted. 

Most organisations have now completed the foundational work of: 

  • Establishing governance arrangements
  • Identifying climate risks and opportunities
  • Conducting scenario analysis
  • Developing emissions targets
  • Integrating climate into enterprise risk management 

The next phase of maturity is financial integration and execution. We identify five recurring gaps that appear consistently across sectors: 

  1. Limited financial quantification of climate impacts
  2. Incomplete or insufficiently detailed transition plans
  3. Weak links between scenario analysis and business decisions
  4. Limited disclosure of adaptation and resilience investments
  5. Poor transparency around materiality assessment methodologies 

These findings indicate that organisations understand climate risks but often struggle to demonstrate how climate considerations influence strategic, operational and financial decisions.  

How companies define resilience 

A key area we analysed is how organisations assess and justify resilience. Leading companies do not rely on a single resilience test. Instead, they combine: 

  • Climate scenario analysis
  • Physical and transition risk assessments
  • Existing risk management capabilities
  • Adaptation and mitigation initiatives
  • Financial materiality assessments
  • Geographic and portfolio diversification
  • Management’s ability to adapt over time 

The most mature disclosures connect resilience conclusions directly to strategic actions, investment decisions and financial outcomes. Less mature reports frequently rely on qualitative statements that risks can be managed without quantifying costs, thresholds or limits of resilience.  

Materiality definitions are converging 

We found strong market convergence around enterprise value and financial materiality concepts. 

The most common approaches to determining material climate issues were: 

  • Impact on prospects and long-term value creation (92%)
  • Impact on cash flows, financial position or performance (82%)
  • Enterprise risk framework thresholds (76%)
  • Investor decision usefulness (63%)
  • Access to finance or cost of capital (38%) 

Many organisations use several of these tests simultaneously. Climate risks are typically filtered through existing enterprise risk frameworks and prioritised according to likelihood, consequence and business significance. A gap in the reports which has the potential to reduce decision usefulness is that relatively few companies explain the thresholds, scoring methodologies or decision rules used to determine when a climate issue becomes material. Investors increasingly want this transparency.  

Leading practice is emerging 

Our work has led us to highlight a five-step pathway that represents emerging leading practice: 

  1. Identify climate risks and opportunities
  2. Assess impacts on strategy, resilience and financial outcomes
  3. Apply predefined materiality thresholds
  4. Quantify material impacts where possible
  5. Integrate findings into strategy, transition plans and capital allocation 

This sequence reflects a move from disclosure compliance toward decision-useful climate management. Companies that can demonstrate these linkages are increasingly differentiating themselves in the market.  

Climate models becoming standardised 

As a final topic we looked at climate models in detail. Our review also reveals growing convergence in the climate scenarios and models used across Australian reporting. 

Most organisations rely on: 

  • IPCC pathways for physical climate science
  • NGFS scenarios for transition and macroeconomic analysis
  • IEA scenarios for energy and transition pathways
  • CSIRO and Bureau of Meteorology datasets for Australian physical risk assessments 

Specialist tools such as XDI, Jupiter Intelligence, WRI Aqueduct and other asset-level modelling platforms are being used selectively where specific physical risks warrant more detailed analysis.  

Key business takeaway 

The overarching message from our work is that climate reporting is entering a new phase. Governance frameworks, risk identification processes and scenario analysis are standard practice. Competitive advantage increasingly comes from demonstrating how climate insights influence financial outcomes, investment decisions, transition plans and resilience investments. Companies that can quantify climate impacts, cost adaptation measures and connect climate analysis to strategic decision-making are likely to set the benchmark for future AASB S2 reporting and meet growing investor expectations for decision useful disclosures.

You can read our detailed analysis in the Appendix here.