Strengthening Business Resilience Through Governance: Meeting the AASB S2 Standard
As compliance-related risks become more pressing, robust governance frameworks are essential for building business resilience and achieving long-term sustainability. Not only do these frameworks help businesses comply with the new AASB S2 reporting standard – they also deliver strategic advantages.
Why Governance Matters for Climate Resilience
Effective governance enables better decisions, stronger risk management, and greater accountability. Key components include:
Board Oversight
The Board plays a central role in setting climate priorities, integrating them into strategy and regularly reviewing risk and performance.
Risk Management
Strong frameworks support the identification, assessment, and mitigation of climate-related risks while also surfacing opportunities.
Stakeholder Engagement
Transparent, ongoing dialogue with investors, customers and other stakeholders helps align business actions and sustainability goals.
Continuous Improvement
Governance frameworks should encourage clear target-setting, performance tracking and regular adjustments to stay on course.
AASB S2 Introduces Higher Expectations for Governance Disclosures
The AASB standards emphasise the importance of governance in climate-related disclosures; businesses are required to provide detailed information on their governance structures and processes. Key expectations include:
Clear Accountability
Identify the individuals or committees responsible for overseeing climate-related issues, including how they stay informed and how often they engage.
Integration into Boarder Governance
Describe how climate-related responsibilities fit into your overall governance structure, including roles and skills, and alignment with strategy.
Oversight of Targets and Performance Metrics
Disclose how climate-related targets are set, monitored, and linked to performance incentives such as executive remuneration.
Risk Management Processes
Outline how climate-related risks are identified, assessed, and managed, including:
- Risk Identification: Outline how physical and transition risks related to climate change are assessed and monitored, including methodologies used, frequency of evaluations, and criteria for determining materiality.
- Integration with Risk Management: Explain how climate-related risks are integrated into the broader risk framework, including monitoring, review, and tools used for tracking and reporting.
By aligning governance with AASB S2, organisations enhance transparency, build trust, and improve sustainability performance.
The Strategic Advantage of Strong Governance
Organisations that embed strong governance benefit from:
Improved Risk Management
Proactively address climate-related risks to protect operations and financial performance.
Enhanced Stakeholder Trust
Demonstrate transparency and accountability, fostering relationships with investors, customers, and employees.
Sustainability Leadership
Don’t just comply – capitalise on sustainability opportunities for long-term growth.
What now?
For businesses to navigate the complexities of climate-related disclosures and achieve sustainable growth, aligning robust governance frameworks with AASB S2 is a strategic priority.
Navigating AASB S2 doesn’t have to be complex. Whether you’re aiming to manage risk, uncover opportunities, or embed sustainability into your core strategy, Synectic’s specialist advisers can help.
Contact us today for personalised advice tailored to your organisation’s needs.
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