What Changed in the AASB S2025-1 Amendments, and What It Means for Your Scope 3 Disclosures

Standards rarely stay still for long, and AASB S2 Climate related Disclosures is no exception. In December 2025, the Australian Accounting Standards Board issued AASB S2025-1 Amendments to Greenhouse Gas Emissions Disclosures, a targeted set of changes built directly on amendments the International Sustainability Standards Board made to IFRS S2 the same month. If your organisation is preparing Scope 3 emissions disclosures, particularly Category 15 investment related emissions, these amendments are worth understanding now, well before they become mandatory.

Why the amendments exist

The changes did not come out of nowhere. They responded to specific application problems reporters and their advisers had raised since AASB S2 first took effect: genuine confusion about which Scope 3 Category 15 emissions actually need to be measured, disagreement about how financed emissions should be classified by industry, and friction between the standard’s default measurement methods and the jurisdictional requirements some entities are already subject to. AASB S2025-1 does not change the architecture of AASB S2. It clarifies and narrows specific requirements within the existing Metrics and Targets pillar.

The changes that matter most

Category 15 (investments) relief, made explicit. Scope 3 Category 15 covers emissions associated with an entity’s investments, and it has always been the most difficult category for organisations with lending, investment, or insurance activities. The amendments confirm that an entity is permitted to limit what it includes in its Category 15 measurement to financed emissions only, meaning emissions attributed to the loans and investments it has actually made (loans, project finance, bonds, equity investments, and undrawn loan commitments), and to exclude emissions attributable to derivatives entirely. If an organisation applies this limitation, it now has a corresponding disclosure obligation: it must explain what it has treated as a derivative for this purpose, describe which financial activities it has excluded as a result, and disclose both the total Category 15 emissions figure and the financed emissions subtotal within it. In short, the relief is real, but it comes with a transparency requirement attached.

A better basis for classifying financed emissions. For entities in commercial banking and insurance, AASB S2 has always required financed emissions to be disaggregated by industry and asset class. The amendments refine how that industry classification is chosen. Rather than defaulting to whatever system an entity happens to use internally, the standard now requires selection of a classification system that genuinely enables users to understand the entity’s exposure to climate related transition risk, with a clear preference for a system that is commonly used across the industry or jurisdiction over an entity specific one, because that is what actually supports comparability between reporters. Entities must disclose which system they used and why it meets this test.

Jurisdictional method relief, clarified. AASB S2 has always allowed an entity to use a measurement method other than the Greenhouse Gas Protocol where a jurisdictional authority or listing exchange requires it, for example under Australia’s National Greenhouse and Energy Reporting scheme. The amendments clarify that this relief applies for the specific part of the entity to which the jurisdictional requirement applies, and only for as long as that requirement remains in force. The same clarification applies to the choice of global warming potential values used to convert greenhouse gases into CO2 equivalent, which otherwise default to the values in the latest IPCC assessment (currently the Sixth Assessment Report).

When this applies to you

AASB S2025-1 applies to annual reporting periods beginning on or after 1 January 2027, with earlier application permitted, matching the flexibility already built into AASB S2 itself. Practically, that means Group 1 entities currently reporting under the unamended standard do not need to apply these changes immediately, but many will choose to adopt them early, particularly if they participate in financial activities where the Category 15 relief is genuinely useful. If your organisation does adopt the amendments before their mandatory date, that early application needs to be disclosed as a matter of fact in your report.

There is also a transition wrinkle worth flagging for anyone adopting the amendments after already reporting under the unamended standard. Comparative information generally needs to be adjusted to reflect the changes, unless doing so is impracticable, covering three specific areas: any change to how greenhouse gas emissions are measured as a result of the amended relief, the newly required Category 15 total and financed emissions subtotal, and any change to the industry classification system used for financed emissions disaggregation.

What to do now

For most organisations outside financial services, the practical impact of AASB S2025-1 is limited, since the changes are concentrated in Category 15 and financed emissions classification. But for banks, insurers, and asset managers already working through Scope 3 measurement, this is a genuine simplification worth incorporating into your reporting approach and disclosed methodology sooner rather than later, rather than waiting for the 2027 deadline to force the issue.