AASB S2 assurance requirements & what group 1 got wrong

Group 2’s first AASB S2 reporting period started on 1 July 2026. If you’re in it, you’re now working through the same four pillars, the same AASB S2 assurance requirements on Scope 1 and 2, and the same audit scrutiny that Group 1 faced first.

The difference is you don’t have to guess where the problems are. Group 1 already found them.

What the first wave actually delivered

PwC reviewed 22 first-wave Group 1 reporters, all with financial years ending 31 December 2025, in its analysis AASB S2 unpacked: how did Australia’s Group 1 climate reporting fare? Every one of them received an unqualified limited assurance opinion under AASB S2 audit review. No material issues within the mandatory scope.

That sounds like a clean pass. Look closer and the picture is less settled.

Only two-thirds of these companies quantified the financial impact of their climate risks and opportunities. The rest leaned on proportionality mechanisms, essentially arguing the measurement uncertainty was too high to put a number on it. AASB S2 allows this. But it’s a judgement call, and judgement calls invite scrutiny. Most of these disclosures weren’t subject to mandatory assurance in Year 1, which means it’s still an open question whether they’d survive audit testing once assurance requirements tighten.

Only one of the 22 companies obtained reasonable assurance over Scope 1 and 2 emissions, rather than the minimum limited assurance AASB S2 requires. Only one extended assurance across the entire sustainability report. Around half did go beyond the mandatory scope in one respect, though: they sought additional limited assurance over voluntary disclosures, most often Scope 3 estimates.

What the regulator flagged

ASIC reviewed a sample of Group 1 reports from the same reporting season and published its early observations on sustainability reporting in May 2026. Two findings stand out for any organisation preparing for a sustainability report audit in Australia.

First, some reports carried disclaimers, either inside the sustainability report or sitting near it, telling readers not to rely on the information for investment decisions. ASIC was clear: that’s not permitted. A disclaimer that conflicts with the statutory purpose of the report is not a get-out clause.

Second, some reports blended mandatory disclosures with voluntary content in a way that made it hard to tell which was which. Under AASB S2’s fair presentation requirement, additional information can’t obscure what’s legally required. If a reader can’t easily separate the two, that’s a compliance problem, not a formatting choice.

ASIC’s final observations are due in the second half of 2026. Group 1’s second reporting cycle, and Group 2’s first, will be measured against a regulator that has now told the market exactly what it’s watching for.

The Scope 3 clock is already running

Scope 3 has a grace period in Year 1, so it’s tempting to treat it as next year’s problem. PwC’s review points to exactly why that’s a mistake.

Calculating Scope 3 is a genuinely different exercise to Scope 1 and 2. It depends on value chain engagement, estimation methodology, and a level of judgement that goes well beyond what Scope 1 and 2 require, because so much of the data sits outside your own operations, with suppliers who may never have measured their emissions before. Getting suppliers to respond, choosing the right calculation method for each category, and defending those choices all take time to establish.

That matters because Scope 3 becomes mandatory in Year 2, and moves toward assurance under ASSA 5010 in the years after that. PwC’s own guidance on this is direct: organisations that bring their assurance provider in early reduce the risk of having to restate figures later, and build more confidence in estimates that are, by nature, harder to pin down than a Scope 1 fuel invoice.

In other words, the pattern PwC’s data points to is that the companies that struggle with Scope 3 assurance are less likely to be the ones with the most complex supply chains, and more likely to be the ones who started supplier engagment in Year 2 instead of Year 1.This is exactly where a dedicated supply chain engagement platform earns its place. Automating supplier data collection now, while Scope 3 is still voluntary from an assurance standpoint, means the estimation methodology and value chain data are already documented and defensible by the time assurance requirements catch up. If your Scope 3 data quality already has gaps, our guide on how to fix Scope 3 data quality issues fast is a good place to start closing them before Year 2 arrives.

What AASB S2 Group 2 reporting means for you

You don’t get a grace period on the fundamentals. Limited assurance on Scope 1 and 2 applies from Year 1, the same as it did for Group 1. Scope 3 has a grace period, but the governance and data quality expectations underneath it don’t. For a full breakdown of what’s required in your first year, see our guide to AASB S2 Group 2 compliance.

The gaps Group 1 hit weren’t really about climate expertise. They were about documentation, traceability, and being able to show an assurance provider exactly where a number or a judgement came from. That’s a systems problem before it’s a reporting problem, and it starts with the emissions factor database behind every figure in your disclosure.

A few things worth doing now, based directly on where Group 1 struggled:

• Document your judgement calls as you make them, not at year-end. Materiality thresholds, value chain boundaries, and any use of proportionality mechanisms need a clear, contemporaneous rationale.
• Keep mandatory and voluntary disclosures visibly separate. If a reader can’t tell which parts of your report are legally required, an auditor will ask the same question.
• Bring your assurance provider in early. Several of the strongest Group 1 reports came from organisations that treated assurance as part of the drafting process, not something applied after the fact.
• Build the audit trail into your data collection from day one. Reconstructing a defensible Scope 1 and 2 inventory after the fact is far harder than capturing it correctly the first time. Our step-by-step guide to mandatory climate reporting walks through how to set this up before your first reporting period closes.

eco-shaper’s platform keeps every emissions figure traceable to its source and every methodology documented as you go, so when your assurance provider asks where a number came from, the answer is already there.

Group 1 spent a year finding out what auditors actually test for. You don’t have to spend yours the same way.

See how eco-shaper builds AASB S2 assurance readiness into your reporting from day one. Book a demo call with our team.