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Architecture and design practices are not automatically required to report under the Australian Sustainability Reporting Standards. AASB S1 is voluntary. AASB S2 is mandatory only for entities that fall within the sustainability-reporting requirements of the Corporations Act 2001. Whether a particular practice must comply depends on its legal entity, size and statutory classification—not on the fact that it designs buildings or interiors.
Even a practice outside the statutory population can be affected when it supplies information to a reporting client. AASB S2 requires a reporting entity to consider material climate-related matters across relevant value-chain relationships, so clients may ask architects, engineers, contractors or consultants for emissions, risk and resilience data.
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What AASB S1 and AASB S2 are designed to do
The standards concern sustainability information that could matter to users of an entity’s general purpose financial reports. They are not building-rating systems, design-certification schemes or a universal requirement to publish every environmental feature of every project.
AASB S1: broad sustainability information, voluntary in Australia
AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information sets general requirements for sustainability-related financial disclosures. An Australian entity may elect to apply it, but an entity claiming compliance must apply all of S1’s requirements. Its application date is annual periods beginning on or after 1 January 2025.
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S1 covers sustainability-related risks and opportunities more broadly than climate alone. It does not become mandatory merely because a practice elects to report under S2.
AASB S2: climate-related financial disclosures
AASB S2 Climate-related Disclosures addresses climate-related risks and opportunities that could reasonably be expected to affect an entity’s cash flows, access to finance or cost of capital over the short, medium or long term. Its core disclosures address governance, strategy, risk management, and metrics and targets. Scenario analysis and Scope 1, Scope 2 and Scope 3 greenhouse-gas emissions are part of the requirements.
S2 is the only mandatory Australian Sustainability Reporting Standard identified by S1’s scope provisions. The legal obligation comes from the Corporations Act 2001, which determines which entities must prepare sustainability reports. S2 does not require separate application of S1; Appendix D in S2 provides the general climate-disclosure requirements drawn from S1.
The practical distinction
| Standard | Subject matter | Australian status | What compliance means |
|---|---|---|---|
| AASB S1 | Sustainability-related financial risks and opportunities generally | Voluntary | An entity choosing to apply it must meet all S1 requirements |
| AASB S2 | Climate-related risks and opportunities with potential financial effects | Mandatory for entities captured by the Corporations Act | Climate disclosures covering governance, strategy, risk management, metrics and targets, including scenario analysis and Scope 1, 2 and 3 emissions |
Do architecture and design firms have to comply with AASB S2?
There is no sector-wide rule making architecture or design firms reporters. The first question is: which legal entity is responsible for the financial report? A sole trader, partnership, private company, public company or group may have different obligations. The relevant entity must be tested against the current statutory criteria, including any applicable size, ownership and reporting requirements under the Corporations Act.
A practice should identify the reporting entity, its financial year and its group structure, then check the current legislation and ASIC guidance. ASIC Regulatory Guide 280 explains obligations for entities required to prepare sustainability reports and discusses information requests through value chains. The words “architecture practice” or “design studio” do not determine the answer.
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When a practice is itself a reporting entity
A reporting practice must assess information material to its own prospects. Possible matters include exposure of offices and project operations to physical hazards, transition risks affecting fees or business models, financing and insurance consequences, governance responsibilities, emissions and targets, resilience planning, and relationships with suppliers and project partners. These are assessment prompts, not a universal checklist: S2 requires material information about risks and opportunities that could reasonably affect the entity.
When a practice is not a reporting entity
A non-reporting practice does not become a statutory S2 reporter simply because a client asks questions. It may nevertheless need to provide relevant information under a professional-services agreement, tender requirement or client data request. The request should be tied to the client’s material climate disclosures and should not be treated as proof that the practice itself has a Corporations Act filing obligation.
When does climate reporting start?
AASB materials identify three phase-in start dates for different entity groups. The date alone does not reveal which group a design practice belongs to; classification requires checking the legal entity and statutory criteria.
| Phase-in start | How to use the date |
|---|---|
| Annual financial years beginning on or after 1 January 2025 | First start date for the group specified by the legislation |
| Annual financial years beginning on or after 1 July 2026 | Second start date for the group specified by the legislation |
| Annual financial years beginning on or after 1 July 2027 | Third start date for the group specified by the legislation |
Do not infer a group from turnover, headcount or industry labels alone. Confirm the applicable thresholds and commencement provisions in the current Corporations Act and ASIC guidance for the reporting period in question.
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The AASB Digital Standards Portal lists the operative versions and dates. Select the version matching the entity’s actual annual reporting period.
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| Version | Applicable annual periods | Important detail |
|---|---|---|
| Original AASB S2, version 9/24 | Beginning on or after 1 January 2025 and before 1 January 2027 | Use for reporting periods in that window unless an allowed early-application choice changes the basis |
| Amended compilation issued 15 December 2025, incorporating AASB S2025-1 | Beginning on or after 1 January 2027 | Includes amendments to greenhouse-gas-emissions disclosures |
Earlier application of the amended compilation is permitted for annual periods beginning on or after 1 January 2025. An entity using early application should document that decision and apply the applicable requirements consistently. The portal is the authoritative place to check the text, operative date and any transitional instructions.
What AASB S2 requires architects and designers to disclose
Governance
Explain the governance processes, controls and oversight used for climate-related risks and opportunities. For a design practice, this could involve board or partner responsibility, delegated authority, review of climate assumptions in business planning and escalation of material issues. The disclosure must describe the entity’s actual arrangements rather than a generic sustainability policy.
Strategy and financial effects
Describe material physical risks, transition risks and opportunities, the time horizons used, and how they affect the business model and strategy. A practice might examine disruption to offices or project delivery, changing client specifications, planning requirements, insurance availability, energy or material-price exposure, and demand for resilient design services. Include financial effects when they could reasonably affect cash flows, access to finance or cost of capital.
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Risk management
Set out how climate-related risks are identified, assessed, prioritised, monitored and integrated with the broader risk-management process. A separate climate register is not automatically required; what matters is a clear account of the process the entity actually uses and how material risks reach decision-makers.
Metrics and targets
Report the metrics and targets used to manage material climate matters. S2 includes Scope 1, Scope 2 and Scope 3 emissions. Scope 1 generally concerns direct emissions from sources the entity owns or controls; Scope 2 concerns purchased energy; Scope 3 concerns relevant value-chain emissions. The boundary, measurement method, emissions factors, assumptions and any estimation should be explained so users can understand the result.
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Scenario analysis and resilience
S2 requires climate-related scenario analysis to assess resilience. It does not prescribe a fixed number of scenarios or fixed temperature outcomes. Choose scenarios that are relevant to the entity’s circumstances, document the assumptions and time horizons, and explain how the results inform strategy. A small practice should not present an elaborate model that cannot be supported by its data.
Value-chain relationships
Assess which upstream and downstream relationships could create material climate information. For an architecture or design practice, this may include consultants, specialist contractors, material advisers, software or data providers, landlords and major clients. Include a relationship only when it is relevant to the reporting entity’s material risks, opportunities or emissions boundary.
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- Confirm the legal perimeter. Name the entity preparing the financial report, identify controlled entities and determine whether the Corporations Act captures it for the relevant year.
- Fix the reporting period and standard version. Match the annual-period start date to the AASB portal’s operative version. Record any permitted early application.
- Set materiality and time horizons. Define short, medium and long term in a way that fits the practice’s strategy, contracts, assets and financing.
- Map the value chain. List key clients, suppliers, consultants, premises and project relationships, then identify where climate information could affect the entity’s prospects.
- Assess physical and transition risks. Consider location-specific hazards, policy and market changes, technology, client demand, insurance and financing. Link each material item to a potential financial effect.
- Choose measurement methods. Establish organisational and operational boundaries, collect activity data, select suitable emissions factors and retain evidence for estimates.
- Run scenario analysis. Select relevant scenarios, test resilience over the chosen horizons and document assumptions, uncertainties and management responses.
- Assign governance and controls. Give named decision-makers responsibility for data quality, review, approvals and updates.
- Prepare disclosures and evidence. Keep calculation files, contracts, invoices, meter data, assumptions, meeting records and target decisions so the report is supportable.
What to provide when a client requests climate information
Start by asking the reporting client what disclosure, boundary and period the request supports. A useful response is specific, reproducible and limited to information the practice can substantiate.
- State the reporting entity, office or project boundary and reporting dates.
- Separate measured data from estimates and identify the method and emissions factors used.
- Describe relevant Scope 1, Scope 2 or Scope 3 categories rather than supplying an unexplained total.
- Explain material physical or transition risks that affect the contracted work, including location and time horizon where appropriate.
- Provide evidence or a clear audit trail, subject to confidentiality and client-contract limits.
- Flag gaps, uncertainty and planned improvements without implying that an estimate is independently assured.
A client’s request can be commercially important, but it does not change the practice’s statutory status. Contract terms should clarify data ownership, confidentiality, update frequency, calculation responsibilities and who bears assurance costs.
How proportionality and uncertainty work
AASB guidance recognises that available information, measurement uncertainty and resources differ between entities. The framework allows requirements to be scaled to circumstances while still requiring information that is reasonable and supportable. That is not permission to omit material information. It means an entity should use the best supportable information available, explain estimation and improve the process as data quality develops.
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Emissions factors should reflect the entity’s circumstances and measurement approach. Industry-based metrics or SASB references are not mandatory under S2. The AASB indicates that SASB can still be a useful voluntary resource for identifying risks, but a practice should not claim S2 compliance merely because it has completed an industry checklist.
Assurance and changing regulatory proposals
Assurance obligations depend on the law applying to the reporting entity and reporting period. The AUASB sustainability-assurance page was updated in August 2026 and notes possible changes discussed in the 2026–27 Budget and a Treasury consultation about assurance phase-in. Those proposals may be subject to consultation and legislation. As at 18 October 2026, do not treat a proposal as enacted law without checking the current legislation and the latest ASIC and AUASB updates.
Common mistakes for design practices
- Assuming sector equals obligation: reporting status follows the legal entity and Corporations Act criteria, not the profession.
- Treating S1 and S2 as interchangeable: S1 is broader and voluntary; S2 is climate-focused and mandatory only for entities captured by law.
- Applying S1 by accident: an entity claiming compliance with S1 must meet all of its requirements.
- Using the wrong version: the 2025–2026 reporting window and periods beginning on or after 1 January 2027 can involve different compilations.
- Reporting every project detail: S2 focuses on material climate-related financial information, not an unlimited catalogue of design attributes.
- Inventing precision: unsupported emissions totals, fixed scenario temperatures or unqualified estimates weaken credibility.
- Confusing a client request with statutory filing: value-chain information can be requested from a supplier without making that supplier a reporting entity.
A practical decision test
Use this sequence whenever a partner asks whether the practice must report:
- Which exact legal entity signs the financial report?
- Does the current Corporations Act capture that entity for the relevant annual period?
- Which phase-in date and AASB S2 version apply?
- What climate-related risks or opportunities could reasonably affect the entity’s prospects?
- Which governance, strategy, risk, metrics, targets, scenario and value-chain information is material?
- What data is measured, what is estimated, and what evidence supports each figure?
- What current assurance, ASIC and AUASB requirements apply, and have any proposed changes actually become law?
The result should be an entity-specific reporting plan, not a generic architecture-sector template. A practice outside the statutory population can still build reliable climate data systems to meet client requests, improve project decisions and respond efficiently if its legal status changes.
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