AASB S2 Metrics and Targets: What Australian Companies Need to Track

The metrics and targets pillar is where AASB S2 compliance becomes a data management exercise. Qualitative governance and strategy disclosures can be prepared with careful thinking and good advisers. Metrics require actual numbers — and those numbers must be traceable.

Here’s every metric category required by AASB S2 and what each involves.

Cross-industry climate-related metrics

AASB S2 specifies seven cross-industry metric categories that all entities must disclose (subject to transition reliefs for some items):

1. Greenhouse gas emissions

Required: Absolute gross Scope 1, Scope 2 (both location-based and market-based), and Scope 3 emissions, in metric tonnes of CO₂-equivalent.

For Scope 3, AASB S2 requires disclosure of which categories are included and explains the approach. Transition relief allows Scope 3 to be omitted in early years of reporting.

The measurement approach must be disclosed: which standard (GHG Protocol, NGER), which boundary (operational control, financial control, equity share), and which emission factor source (NGA Factors for Australian entities).

2. Transition risk exposure

Required: The amount and percentage of assets or business activities vulnerable to transition risks.

This typically involves identifying assets or revenue streams that are exposed to policy, regulatory, or market shifts in the transition to a lower-carbon economy — for example, plant or vehicles that would be affected by a future fuel efficiency standard, or product lines dependent on fossil fuel inputs.

3. Physical risk exposure

Required: The amount and percentage of assets or business activities vulnerable to acute and chronic physical risks.

This requires identifying assets in locations exposed to physical climate events (flood zones, cyclone-prone areas, high-temperature regions) and quantifying the value at risk.

4. Climate-related opportunities

Required: The amount and percentage of assets or business activities aligned with climate-related opportunities.

For construction businesses, this might include the proportion of revenue from green building projects, renewable energy infrastructure, or energy efficiency retrofits.

5. Capital deployment

Required: The amount of capital expenditure, financing, and investment deployed toward climate-related risks and opportunities.

This includes investment in decarbonisation of operations (electrification, energy efficiency), green building projects, or physical adaptation measures (flood protection, heat management).

6. Internal carbon price

Required: Whether an internal carbon price is used in decision-making, and if so, the price per tonne of emissions.

Entities that don’t use an internal carbon price must disclose that fact. Those that do use one must describe how it is applied (e.g., shadow pricing in capital project appraisals) and at what level.

7. Executive remuneration

Required: Whether climate-related considerations are included in executive remuneration and what percentage of remuneration is linked to climate.

Climate-related targets

Where an entity has set climate-related targets (e.g., a net zero target, an emissions reduction target), AASB S2 requires detailed disclosure:

• What the target is (absolute emissions, intensity, a specific milestone)
• Scope — which Scope 1, 2, and/or 3 categories are covered
• Time period — from base year to target year
• Base year — the reference year and base year emissions
• Interim milestones — any targets set between now and the final date
• Whether absolute or intensity-based — absolute (total tonnes) vs intensity (per unit of revenue, per employee, per tonne of product)
• Progress monitoring — how the entity tracks and reports progress

If a net zero target relies on carbon offsets, the reliance must be disclosed — including the type of offsets, the verification scheme, and how the entity distinguishes gross emissions reduction from offset use.

What to prepare

For the first year of AASB S2 reporting, the minimum data requirements are:

1. Scope 1 and Scope 2 emissions — measured, in tonnes CO₂e, with methodology notes
2. Transition and physical risk asset exposure — even a qualitative assessment with approximate values is a starting point
3. Capital deployment toward climate — identify investments with a climate rationale
4. Internal carbon price — state whether used
5. Remuneration link — describe the link (or absence of it)
6. Climate targets — if you have any, document them in full; if not, disclose that no targets are currently in place

Most organisations entering mandatory reporting will have emissions data as the biggest gap. The other metrics involve judgement and documentation — challenging, but less dependent on operational data infrastructure.

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Ayika focuses on making Scope 1 and Scope 2 data accurate, complete, and auditable — the foundation of your metrics and targets disclosure. See how metrics reporting works in the platform.