Cutting through the acronyms: climate-related disclosure explained

Climate-related disclosure has moved from a specialist topic into mainstream business reporting. Investors, lenders, regulators and boards increasingly expect clear information about how climate change could affect a business.

In Australia, mandatory climate-related financial disclosure is being phased in. In Aotearoa New Zealand, a mandatory regime for defined entities has been in place since 2023.

This article explains the key concepts, where climate disclosure fits into the sustainability reporting landscape and what matters right now.

What is the purpose of climate-related disclosures?

Climate-related disclosures help investors and other stakeholders understand how climate change could affect an organisation’s operations, supply chains and financial performance.

This includes:

  • physical risks such as floods, storms and heat

  • transition risks and opportunities such as policy change, carbon pricing, market shifts and new technologies.

In practice, this means understanding where climate could affect revenue, costs, asset values or access to markets. The disclosure explains where the business is exposed, what that could mean financially and how those risks and opportunities are managed. This shifts climate from a sustainability topic to a core business and financial issue.

Do I have to do a climate-related disclosure?

In Australia

In Australia, climate-related disclosure is now mandatory for certain entities under the Corporations Act. The requirements are being phased in:

Reporting group

Reporting starts

First report due (FY)

Thresholds (meet 2 of 3)

Group 1

From 1 January 2025

After 30 June 2026

$500m revenue, $1b assets, 500 employees

Group 2

From 1 July 2026

After 30 June 2027

$200m revenue, $500m assets, 250 employees

Group 3

From 1 July 2027

After 30 June 2028

$50m revenue, $25m assets, 100 employees

Entities in scope must prepare a sustainability report that includes climate-related financial information. For businesses, this means climate is now part of financial reporting. It is no longer a separate sustainability exercise.

In New Zealand  

In October 2025 the New Zealand government announced plans to lower the threshold for listing companies from $60 million market capitalisation to $1 billion and to remove managed investment schemes from the regime.

Why should I voluntarily report?

Even if you are not required to report yet, voluntary climate-related disclosure can be valuable.

Voluntary reporting helps organisations:

  • understand where climate risks and opportunities sit in the business

  • improve governance and decision-making

  • prepare for investor, lender and customer expectations

  • identify data and capability gaps early.

Voluntary climate-related disclosure is not just about preparing for future requirements. It helps organisations build capability, improve data and make more informed business decisions now. It also positions businesses to respond to increasing expectations across their value chain.

Many jurisdictions are requiring or introducing mandatory sustainability-related disclosures, including the European Union (EU), the United Kingdom (UK), Singapore, Canada, Japan, Malaysia, Brazil, Chile, Mexico, Hong Kong and China. These requirements may affect entities based in Australia or New Zealand if they trade with, are listed in or operate in these jurisdictions.

For example, around 70% of New Zealand exports go to countries introducing mandatory climate disclosures, meaning many organisations will be asked for climate-related information regardless of whether they are directly in scope. Voluntary reporting provides a structured way to respond, strengthen credibility and stay competitive in these markets.

What about all the acronyms?

If you have started looking into climate-related disclosure, you have likely come across a long list of acronyms. From AASB and ISSB to CSRD and TNFD, it can feel complex and difficult to navigate. The good news is that these frameworks are increasingly aligned and often build on each other. This section breaks down the most important acronyms, what they mean and how they fit together in practice.

What is the AASB?

The Australian Accounting Standards Board (AASB) sets accounting and sustainability reporting standards in Australia. It issued AASB S1 and AASB S2 in 2024. AASB S2 is the core climate standard used for mandatory reporting. The regime is overseen by the Australian Securities and Investments Commission (ASIC), which provides guidance and enforcement.

What is the XRB?

The External Reporting Board (XRB) is New Zealand’s independent standard setter. It develops and maintains accounting, assurance and climate standards, including the Aotearoa New Zealand Climate Standards.

What is the ISSB?

The International Sustainability Standards Board (ISSB) is the global standard setter for sustainability-related financial disclosures. It was established in 2021 by the International Financial Reporting Standards (IFRS) Foundation to create a consistent, comparable global baseline for reporting.

The ISSB issued its first two standards in June 2023:

  • IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

  • IFRS S2: Climate-related Disclosures

These standards are designed for investor-focused reporting and are intended to help organisations disclose sustainability-related risks and opportunities in a consistent and decision-useful way. In practice, this means identifying what is material, linking it to financial outcomes, and explaining how it is being managed.

IFRS S2 builds on the earlier work of the Task Force on Climate-related Financial Disclosures (TCFD), which introduced a widely adopted framework structured around governance, strategy, risk management, and metrics and targets. While the TCFD itself is no longer active, its approach is now embedded in the ISSB standards.

IFRS S2 is now used around the world as the basis for climate-related disclosures, including the Aotearoa New Zealand Climate Standards and AASB S2.

What is the SASB?

The Sustainability Accounting Standards Board (SASB) developed industry-specific standards to help organisations disclose financially material sustainability information to investors. SASB standards focus on what is most relevant for each industry. For example, emissions and energy use for heavy industry, or data privacy for technology companies.

SASB is now maintained by the IFRS Foundation and is used to support ISSB reporting. In practice, it helps organisations identify what to disclose within IFRS S1 and S2.

What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s mandatory sustainability reporting regime. It requires companies to disclose detailed information on environmental, social and governance (ESG) topics, including climate.

Companies in scope must report in line with the European Sustainability Reporting Standards (ESRS). These standards set out what to disclose and how to disclose it, including specific metrics, topics and methodologies.

A key feature is double materiality. This means organisations must report both how sustainability issues affect financial performance, and how their activities impact the environment and society. The CSRD is broader and more detailed than ISSB-based standards. It applies to many companies operating in or trading with the EU, including some based outside Europe.

What is the TNFD?

The Taskforce on Nature-related Financial Disclosures (TNFD) provides a framework for organisations to identify and disclose nature-related risks and opportunities.

It builds on the same foundations as climate disclosure but focuses on nature, including biodiversity, water and ecosystems. Nature-related risks can affect business performance. For example:

  • supply chain disruption

  • increased input costs (such as water)

  • regulatory change

  • reputational risk.

A key difference is its focus on dependencies and impacts. This means looking at how nature affects the business, and how the business affects nature.

TNFD is currently voluntary, but it is gaining traction. For most organisations, climate remains the priority, with nature expected to follow.

What is the TISFD?

The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) is an emerging initiative focused on social and inequality-related risks and opportunities.

It builds on the same logic as climate and nature disclosures, recognising that social issues such as workforce conditions, community impacts and inequality can also affect business performance and long-term value.

The aim is to provide a framework for organisations to assess and disclose how social factors influence financial outcomes and strategy.

TISFD is still developing and is not yet widely adopted. However, it signals the direction of travel. Over time, organisations can expect increasing expectations to consider not just climate and nature, but also social factors in a structured and financially relevant way.

What happened to <IR> and GRI?

Integrated Reporting (<IR>) is now maintained under the IFRS Foundation. It remains useful for explaining how an organisation creates value over time.

The Global Reporting Initiative (GRI) is also still widely used and can be used to satisfy IFRS requirements. It focuses on reporting impacts on the environment, economy and society.

How does it all fit together?

With multiple frameworks in play, the key is understanding how they connect rather than treating them separately.

ISSB (IFRS S1 and S2): global baseline for investor-focused reporting

AASB / XRB: local standards applying ISSB in Australia and New Zealand

CSRD: European Union requirements with a broader scope, including double materiality

SASB: industry-specific guidance to support identification of material topics

TNFD: a similar framework for nature-related risks and opportunities

TISFD: emerging framework for social and inequality-related risks

GRI: broader sustainability and impact reporting

<IR>: framework for explaining how an organisation creates value over time

Together, these frameworks are becoming more aligned. ISSB provides the global baseline for financial disclosure, while other frameworks add depth, industry context or a broader sustainability perspective.

Our takeaway

Most organisations are now moving towards ISSB-aligned reporting, either directly or through local standards. Climate-related disclosure is becoming part of how businesses explain performance and future outlook.

For organisations in Australia and New Zealand, the key is to understand what applies, when it applies and how climate connects to financial outcomes. Starting early helps build capability, improve data and support better decisions.

Done well, climate-related disclosure is not just about compliance. It helps organisations understand risk, identify opportunities and strengthen long-term performance.

Where to start

If this still feels complex, you are not alone. We have developed disclosurekit, a practical system that breaks climate-related disclosure into clear, practical steps aligned with AASB S2. It helps organisations identify what matters, link climate to financial outcomes and build capability over time. disclosurekit provides a structured, cost-effective way to get the most out of climate-related disclosures. 




This blog was updated in March 2026