AASB S2 explained: what your customers may ask suppliers for
AASB S2 is Australia's mandatory climate related financial disclosure standard. It is being phased in across three groups of large reporting entities between 2025 and 2028, and it requires those entities to disclose Scope 3 emissions, which are the emissions in their value chain. That is why some suppliers are starting to be asked for emissions or sustainability data by customers who report under AASB S2, even when the supplier itself has no reporting duty at all.
What is AASB S2?
AASB S2 is the Australian Accounting Standards Board's sustainability reporting standard for climate related disclosures. It requires covered entities to report on governance, strategy, risk management, and metrics and targets, including Scope 1, 2 and 3 greenhouse gas emissions. It sits inside Chapter 2M of the Corporations Act and is overseen by ASIC, whose Regulatory Guide 280 sets out how the regime applies in practice.
Who has to report under AASB S2?
Reporting is phased by group, based on when an entity's annual reporting period starts.
Group 1: reporting periods starting 1 January 2025 to 30 June 2026. Revenue of $500 million or more, gross assets of $1 billion or more, or 500 or more employees (two of three tests), plus NGER registered corporations in a group meeting the relevant NGER threshold.
Group 2: reporting periods starting 1 July 2026 to 30 June 2027. Revenue of $200 million or more, gross assets of $500 million or more, or 250 or more employees (two of three tests), plus all NGER reporters and large registered schemes, super funds and retail CCIVs.
Group 3: reporting periods starting from 1 July 2027, so first reports from 2028. Revenue of $50 million or more, gross assets of $25 million or more, or 100 or more employees (two of three tests).
Group 2 reporting periods are now underway. A 2026-27 Budget proposal would lift the Group 3 thresholds to $100 million revenue and $50 million assets, which would move some smaller entities out of mandatory reporting if it proceeds. Timing is not yet confirmed.
Why would my customer ask me for data if I'm not required to report?
AASB S2 requires reporting entities to disclose their Scope 3 emissions, and Scope 3 includes emissions that occur in their supply chain, meaning emissions associated with the goods and services they buy from suppliers like you. If your customer is a Group 1 or Group 2 entity now, or will be a Group 3 entity from 2028, they may need to account for emissions linked to what they buy from you, even though you have no obligation to report under AASB S2 yourself.
What is Scope 3, and why does it involve my supply chain?
Scope 3 covers indirect emissions outside a reporting entity's own operations, including those generated by its suppliers in producing the goods and services it purchases. Reporting entities can estimate Scope 3 emissions using primary data such as figures a supplier provides, secondary data such as industry averages, or a mix of both, using reasonable and supportable information that does not require undue cost or effort to obtain. First year relief applies, and Scope 3 disclosure is required from an entity's second reporting year onward.
Do I have to collect and provide this data?
No supplier obligation exists under AASB S2 unless your own business independently meets one of the group thresholds above. ASIC's own guidance states that large businesses are generally expected to use estimates and industry averages rather than collect data directly from smaller suppliers, and that if a request feels difficult or disproportionate, the supplier should raise that directly with the customer making it.
What is changing, and when?
In August 2026, Treasury consulted on proposals to make the regime more efficient, including clearer limits on how much value chain data reporting entities can reasonably request from smaller suppliers, and additional public domestic emissions factors so reporting entities rely less on data collected directly from suppliers. That consultation closed on 2 October 2026 and nothing has been legislated yet. Suppliers should expect current practice, occasional and estimate friendly requests, to continue until any change is confirmed.
What should I do if a customer asks?
A simple way to handle a request:
Check exactly what's being asked for. Is it your own emissions data, or just confirmation of certain activities or certifications?
Share what you reasonably can. Reporting entities are expected to accept estimates, not demand audited figures from suppliers.
Say so if it's too costly or difficult. ASIC's own guidance expects this conversation to happen.
Keep a record of what you provided and when, in case the same customer, or another one, asks again.
How does ESG Verified certification help?
ESG Verified certification does not satisfy AASB S2 itself. AASB S2 is a reporting obligation on large entities, not a certification scheme for suppliers. What certification does is give you a standing, evidence based record, reviewed against defined rules, of governance and ESG related documentation, so a response to a customer's request is faster to produce than building one from scratch each time. ESG Verified certification is evidence based and reviewed against defined rules; it is not an audit, an assurance engagement, or an independent verification of the underlying facts.
If a customer has also asked about your Modern Slavery Statement, see what suppliers are typically asked to provide.
Frequently asked questions
Does AASB S2 apply to small businesses?
Not directly. AASB S2 applies to large entities in Groups 1 to 3 that meet specific revenue, asset or employee thresholds. A smaller business supplying one of these entities has no independent reporting duty under AASB S2, though it may still be asked for data related to the customer's own Scope 3 disclosure.
What happens if I don't respond to a customer's data request?
There is no legal penalty under AASB S2 for a supplier who does not respond, because the reporting obligation sits with the reporting entity, not the supplier. ASIC's guidance expects reporting entities to manage this by estimating where supplier data isn't available.
Is my data protected if I share it?
AASB S2 doesn't set separate data protection rules for supplier information beyond what already applies under Australian privacy and commercial law. Any specific protections or permitted uses should be agreed directly with the customer requesting the data.
Will the rules on supplier data requests change?
Possibly. Treasury consulted in August 2026 on clearer limits for value chain data requests. That consultation closed in October 2026 and no changes have been confirmed as law yet.
Where can I find official guidance?
ASIC's Regulatory Guide 280 and its dedicated small business sustainability reporting page are the primary official sources. Both are linked in the sources below.
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