Viable Pathway's Role in AASB S2 Compliance:
Transition Planning and Scenario Analysis
The outputs from Viable Pathway's analysis can form part of the statutory disclosure process. The outputs are designed to provide the foundational quantitative data required for robust and defensible reporting under the Australian Accounting Standards Board (AASB) S2 requirements.
What Viable Pathway Provides
Our core deliverable is the creation of detailed GHG (Greenhouse Gas) Projections and Scenarios of GHG Projections
Viable Pathway's tool ensures that your organisation's target setting and emissions transition plan components of an AASB S2 report are audit-ready. Our tool directly fulfills the Transition Plan and Metrics requirements of AASB S2 by providing specific quantitative evidence. This evidence is generated by modelling your organisation's 'Internal Actions' against 'External Trends' and 'Business As Usual (BAU)' pathways.
Viable Pathway's outputs are essential for addressing several key paragraphs within the standard:
| AASB S2 Paragraph | Requirement | Viable Pathway's Contribution |
|---|---|---|
| Paragraph 14 (Transition Plans) & 33 (Targets) | Disclose how targets will be achieved and the progress of the transition plan. | We provide the specific quantitative evidence (modelling internal actions vs. external trends) required to demonstrate progress and plan resilience. |
| Paragraph 15 (Financial Effects) | Disclose the financial impact of climate-related transition risks (e.g., carbon tax, CapEx). | An accurate emissions projection and scenario analysis are prerequisites for this calculation. Our tool provides the necessary emissions scenario pathways data for you to then perform the financial impact calculation. |
| Paragraph 22 (Scenario Analysis) | Identify and assess a potential range of outcomes of future events under conditions of uncertainty for both physical and transition risks. | Our tool specifically focuses on Transition Risk scenario analysis (e.g., 1.5°C vs. disorderly transition), evaluating how your transition plan would perform under a potential range of future events aligned with different warming scenarios. |
The objective of climate-related financial disclosures on governance is to enable users of general purpose financial reports to understand the governance processes, controls and procedures an entity uses to monitor, manage and oversee climate-related risks and opportunities.
6To achieve this objective, an entity shall disclose information about:
(a) the governance body(s) (which can include a board, committee or equivalent body charged with governance) or individual(s) responsible for oversight of climate-related risks and opportunities. Specifically, the entity shall identify that body(s) or individual(s) and disclose information about: (i) how responsibilities for climate-related risks and opportunities are reflected in the terms of reference, mandates, role descriptions and other related policies applicable to that body(s) or individual(s); (ii) how the body(s) or individual(s) determines whether appropriate skills and competencies are available or will be developed to oversee strategies designed to respond to climate-related risks and opportunities; (iii) how and how often the body(s) or individual(s) is informed about climate-related risks and opportunities; (iv) how the body(s) or individual(s) takes into account climate-related risks and opportunities when overseeing the entity’s strategy, its decisions on major transactions and its risk management processes and related policies, including whether the body(s) or individual(s) has considered trade-offs associated with those risks and opportunities; and (v) how the body(s) or individual(s) oversees the setting of targets related to climate-related risks and opportunities, and monitors progress towards those targets (see paragraphs 33–36), including whether and how related performance metrics are included in remuneration policies (see paragraph 29(g)). (b) management’s role in the governance processes, controls and procedures used to monitor, manage and oversee climate-related risks and opportunities, including information about: (i) whether the role is delegated to a specific management-level position or management-level committee and how oversight is exercised over that position or committee; and (ii) whether management uses controls and procedures to support the oversight of climate-related risks and opportunities and, if so, how these controls and procedures are integrated with other internal functions. 7In preparing disclosures to fulfil the requirements in paragraph 6, an entity shall avoid unnecessary duplication in accordance with Appendix D (see paragraph B42(b) in Appendix D)...
Aus7.1The requirement in paragraph 7 to avoid unnecessary duplication applies particularly if an entity elects to voluntarily apply AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information (September 2024)...
Strategy 8The objective of climate-related financial disclosures on strategy is to enable users of general purpose financial reports to understand an entity’s strategy for managing climate-related risks and opportunities.
9Specifically, an entity shall disclose information to enable users of general purpose financial reports to understand:
(a) the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects (see paragraphs 10–12); (b) the current and anticipated effects of those climate-related risks and opportunities on the entity’s business model and value chain (see paragraph 13); (c) the effects of those climate-related risks and opportunities on the entity’s strategy and decision-making, including information about its climate-related transition plan (see paragraph 14); (d) the effects of those climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period, and their anticipated effects... (see paragraphs 15–21); and (e) the climate resilience of the entity’s strategy and its business model to climate-related changes... (see paragraph 22). Climate-related risks and opportunities 10An entity shall disclose information that enables users of general purpose financial reports to understand the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. Specifically, the entity shall: (a) describe climate-related risks and opportunities... (b) explain... whether the entity considers the risk to be a climate-related physical risk or climate-related transition risk...
11In identifying the climate-related risks and opportunities... the entity shall use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort...
12[Deleted by the AASB]
Business model and value chain 13An entity shall disclose information that enables users of general purpose financial reports to understand the current and anticipated effects of climate-related risks and opportunities on the entity’s business model and value chain. Specifically, the entity shall disclose: (a) a description of the current and anticipated effects... and (b) a description of where in the entity’s business model and value chain climate-related risks and opportunities are concentrated...
Strategy and decision-making 14An entity shall disclose information that enables users of general purpose financial reports to understand the effects of climate-related risks and opportunities on its strategy and decision-making. Specifically, the entity shall disclose: (a) information about how the entity has responded to, and plans to respond to, climate-related risks and opportunities... (i) current and anticipated changes to the entity’s business model, including its resource allocation... (iv) any climate-related transition plan the entity has... and (v) how the entity plans to achieve any climate-related targets, including any greenhouse gas emissions targets, described in accordance with paragraphs 33–36.
Financial position, financial performance and cash flows 15An entity shall disclose information that enables users of general purpose financial reports to understand: (a) the effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (current financial effects); and (b) the anticipated effects... over the short, medium and long term...
16Specifically, an entity shall disclose quantitative and qualitative information about: (a) how climate-related risks and opportunities have affected its financial position... (c) how the entity expects its financial position to change over the short, medium and long term... and (d) how the entity expects its financial performance and cash flows to change...
17-21[Provisions regarding single amounts vs ranges, reasonable and supportable information, and exemptions from quantitative disclosure if effects are not separately identifiable or measurement uncertainty is high...]
Climate resilience 22An entity shall disclose information that enables users of general purpose financial reports to understand the resilience of the entity’s strategy and business model to climate-related changes, developments and uncertainties... The entity shall use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with the entity’s circumstances (see paragraphs B1–B18). Specifically, the entity shall disclose: (a) the entity’s assessment of its climate resilience... (i) implications for strategy... (iii) capacity to adjust or adapt... and (b) how and when the climate-related scenario analysis was carried out...
23 / Aus23.1[AASB guidance on cross-industry metric categories described in paragraph 29.]
Risk management 24The objective of climate-related financial disclosures on risk management is to enable users to understand an entity’s processes to identify, assess, prioritise and monitor climate-related risks and opportunities...
25To achieve this objective, an entity shall disclose information about: (a) the processes and related policies... (b) the processes the entity uses to identify, assess, prioritise and monitor climate-related opportunities... and (c) the extent to which processes are integrated into and inform the entity’s overall risk management process.
Metrics and targets 27-28The objective... is to enable users to understand an entity’s performance in relation to its climate-related risks and opportunities... to achieve this objective, an entity shall disclose information relevant to cross-industry metric categories and targets set by the entity...
29An entity shall disclose information relevant to the cross-industry metric categories of: (a) greenhouse gases (Scope 1, 2, and 3 expressed as metric tonnes of CO2 equivalent)... (b) climate-related transition risks... (c) climate-related physical risks... (d) climate-related opportunities... (e) capital deployment... (f) internal carbon prices... and (g) remuneration.
30-32[Detailed preparation guidance for paragraphs 29(b)–(g). Paragraph 32 deleted by the AASB.]
Climate-related targets 33An entity shall disclose the quantitative and qualitative climate-related targets it has set to monitor progress towards achieving its strategic goals, and any targets it is required to meet by law or regulation, including any greenhouse gas emissions targets. For each target, the entity shall disclose: (a) the metric used... (b) the objective... (c) the part of the entity to which the target applies... (d) the period... (e) the base period... (f) any milestones... (g) if target is absolute or intensity... and (h) how the latest international agreement on climate change has informed the target.
34An entity shall disclose information about its approach to setting and reviewing each target, and how it monitors progress against each target...
35An entity shall disclose information about its performance against each climate-related target and an analysis of trends or changes in the entity’s performance.
36For each greenhouse gas emissions target disclosed... an entity shall disclose: (a) which greenhouse gases are covered... (b) whether Scope 1, 2 or 3 are covered... (c) gross vs net target... (d) sectoral decarbonisation approach... and (e) planned use of carbon credits.
Viable Pathway is NOT a complete AASB S2 disclosure solution
AASB S2 requires a comprehensive assessment covering financial effects, physical risks, and broad strategy resilience.
- We focus exclusively on Transition Risk scenario analysis and GHG projections.
- We do not include the Physical Risk Assessment, which is a separate fundamental element of AASB S2.
- We provide the data for the financial effects calculation, but consultants are required to link the transition plan to your organisation’s financial plan for full disclosure compliance.
Components Addressed by Viable Pathway's Tool:
- GHG Projections and Scenarios of GHG Projections: This is Viable Pathway's core deliverable.
- Transition Plan Requirements (Paragraph 14 & 33): The tool provides the specific quantitative evidence required to demonstrate how targets will be achieved and the progress of the transition plan by modelling 'Internal Actions' against 'External Trends' and 'Business As Usual (BAU).'
- Metrics Requirements: The tool provides quantitative data for compliant and defensible disclosures.
- Transition Risk Scenario Analysis (Paragraph 22): VP specifically focuses on this by evaluating how an organisation's transition plan would perform under a range of future events (e.g., 1.5°C vs. disorderly transition).
- Emissions Scenario Pathways Data (Paragraph 15): The tool provides this data, which is a necessary prerequisite for calculating the financial impact of transition risks (e.g., carbon tax liability or CapEx requirements).
Components Explicitly Not Included in Viable Pathway's Scope:
- Complete AASB S2 Disclosure: VP is explicitly stated as not a complete AASB S2 disclosure solution.
- Physical Risk Assessment: This is a fundamental element of AASB S2 that is not part of VP's GHG projections.
- Linking the Transition Plan to an Organisation's Financial Plan: Consultants are required to perform this step to calculate the financial effects of transition risk for full disclosure compliance. VP only provides the emissions data needed for this calculation.