N.B.: This article was first shared by Tim on LinkedIn
The first wave of ISSB S2-aligned sustainability reports (known as AASB S2 in Australia) landed in early 2026. The results vary wildly in quality, with some excellent, well-researched examples sitting alongside some bafflingly limited disclosures. With less than twelve months before mandatory UK SRS reporting is likely to come in to force, Australia’s experience – warts and all – is the closest thing to a real-world rehearsal we have.
Why listen to me?
Until last year, I was based in Australia, leading the efforts of a company to understand climate-related risks and manage the demands of AASB S2 compliance – and talking to many others doing the same. This article charts the lessons the UK can learn from the Australian experience, from the leadership conversations that should have happened earlier, the gaps in expertise and governance and the inevitable last-minute scrambles.
Why the Australian experience matters for UK companies
AASB S2 and UK SRS are built from the same blueprint: the ISSB’s IFRS Climate-related Disclosures standards. Both use the same four disclosure pillars – governance, strategy, risk management, and metrics and targets. Both require scenario analysis, Scope 1 and 2 emissions from the outset, with Scope 3 entering on a phased basis. Both are backed by assurance requirements that will tighten over time.
The UK government formally published UK SRS S1 and S2 on 25 February 2026 – the same week that Australian companies were filing their first reports. The standards are now available for voluntary use, with the FCA consulting on mandatory adoption for listed companies until 20 March 2026. Final FCA rules are expected in autumn 2026, with requirements coming into force from 1 January 2027.
That gives UK firms less than twelve months before mandatory reporting likely begins. Australia’s experience, warts and all, is the closest thing to a real-world rehearsal we have.
The first reports are in…and… gulp.
Australia’s largest corporations and significant emitters are at the vanguard of a landmark moment in corporate climate reporting, with the first mandatory ISSB-aligned sustainability reports published in early 2026.
PwC Australia reviewed 22 of these first-wave disclosures published on the ASX by 27 February 2026. What they found is probably not surprising to anyone who has had to navigate new reporting standards: report lengths ranged from just 7 pages to 82 pages and quality varies enormously – not just across industries, but between direct peers too. Some companies published detailed disclosure indices that clearly mapped their report to the standard’s requirements; others produced documents that raised more questions than they answered.
“The market is building sustainability reporting capability in real time” PWC Australia
For a disclosure that’s meant to help investors get better informed about the climate-related risks facing a business, that’s a big concern. Over the years, the assurance requirements for these reports ramp up, so all eyes will be on whether the big audit firms can do the job of increasing and enforcing quality.
Either way, for UK firms watching from a distance, such variability should be a wake-up call. In a market where investors are used to reviewing TCFD-aligned reports, firms that fail to adequately understand and disclose their climate risks could face far higher consequences in the market than their Australian counterparts.
Five lessons UK firms should take from the Australian experience
1. The Governance disclosure is harder than it looks
One of the most common stumbling blocks in the first Australian reports was the governance pillar. Australian boards quickly discovered that describing how the board “monitors and oversees” climate risks is far more demanding than simply listing committee responsibilities. The Australian Institute of Company Directors noted that many boards initially treated climate reporting as an extension of existing compliance processes, only to discover it required a structural shift in how boards engage with climate as a strategic issue.
For UK boards, the learning should be this: governance disclosures must be evidenced, specific, and audit-ready. Describing a Climate & ESG Committee that meets quarterly is not sufficient. The standard asks how climate considerations influence actual decisions – capital allocation, executive incentives, strategic planning. UK firms should be building board skills matrices, documenting escalation processes and linking climate KPIs to executive pay now, not after the first draft of their report is written.
2. Effective scenario analysis is where reports are won and lost
UK SRS requires companies to conduct climate scenario analysis under at least two temperature pathways. In theory, this is a forward-looking analytical exercise. In practice, many first-wave Australian reports revealed scenario analysis that was boilerplate, unconnected to the company’s actual business model, or so hedged with caveats as to be uninformative.
The expectation – from regulators and investors alike – is that scenario analysis should inform, not decorate, a report. It should demonstrate that the company has genuinely tested its strategy against different futures, quantified where possible and linked outcomes to specific financial exposures.
What the Australian reports made painfully clear is that this kind of analysis can’t be done in isolation. The climate risks that matter most to a business rarely sit nearly within its own operations; they live in the supply chain, in the behaviour of customers, in energy infrastructure and critical logistics nodes.
Scenario analysis built on a shallow understanding of value chain risk tends to produce the kind of vague, caveat-laden disclosure that regulators and investors will quickly lose patience with. Starting this work now, rather than approaching it as a last-minute disclosure exercise, is the difference between a credible report and one that raises more questions than it answers.
3. Don’t wait for year 2 to begin tackling Scope 3
Both AASB S2 and UK SRS S2 offer transitional relief on Scope 3 emissions in the first year of reporting. Many Australian Group 1 companies took that relief, but 12 of the 22 first-wave reporters reviewed by PwC Australia voluntarily disclosed at least some Scope 3 categories anyway.
For many larger UK companies, disclosing scope 3 emissions has been standard for several years, but that’s certainly not universal. For those with complex supply chains or financed emissions, developing credible methodologies and building the necessary data architecture to calculate emissions can take time – often 12–18 months of focused effort. Companies that wait until year 2 to start thinking about scope 3 will likely face another mad scramble. The relief should be treated as a runway, not an excuse.
4. Assurance is a process, not a final step
Australia’s assurance regime requires limited assurance over Scope 1 and 2 emissions and governance disclosures from Year 1, scaling toward reasonable assurance across all disclosures by the time financial years beginning on or after 1 July 2030 begin. While the UK’s approach is yet to be finalised, the FRC has been asked to establish an interim register of sustainability assurance practitioners by mid-2026, with the relevant standard (ISSA (UK) 5000) effective for periods beginning on or after 15 December 2026.
The lesson from Australia is that companies that treated assurance as a sign-off at the end of the reporting process often ran into trouble. PwC’s review found that early engagement with assurance providers – bringing them into methodology decisions, boundary-setting, and emissions calculations early – significantly reduced late-stage rework and strengthened confidence in the numbers. UK firms should be in conversation with their auditors now, not after the first report is drafted.
Note – there’s a challenge for auditors here too. How can accountants and climate risk experts be brought together to provide proper scrutiny of UK SRS disclosures?
5. ‘Compliant’ is not the same as ‘good’
Perhaps the most uncomfortable lesson from Australia is that technically compliant disclosures can still be deeply unsatisfying. Some first-wave reports ticked all the boxes but remain completely useless as a guide to understanding the climate risks a business is facing or what they are doing about them.
ASIC – the Australian regulator – is taking a pragmatic approach during the transition period, but regulatory patience has a shelf life. Investor and media scrutiny may not be so kind. UK companies are likely to be on an even shorter leash, given that many of them have already had to report TCFD-aligned disclosures.
Ultimately, the lesson to learn is that smart companies should be using the preparation window to do the groundwork that’s needed to build genuinely informative reports. Those that do will be far better positioned when scrutiny increases and sophisticated investors start asking the tough questions…
The bottom line for UK firms
The FCA consultation closes on 20 March 2026. Mandatory rules for listed companies are expected by autumn, with requirements in force from January 2027. That is not a long runway. And while the UK standards include some transitional relief provisions – scope 3 on a comply-or-explain basis, UK SRS S1 with a two-year grace period – the direction of travel is clear.
Australia’s experience shows that companies that fail to treat climate reporting as a genuine strategic discipline produce reports that range from thin to embarrassing. Companies that start early, invest in skills, bring boards into substantive climate governance and treat assurance as a process rather than a formality produce something different: a report that informs investors and serves as the basis for future commercial resilience.
Australia is giving us a library of the good, the bad and the ugly. The question now: will UK firms take advantage?
What’s your view? What are the biggest challenges facing UK firms in preparing for UK SRS? Are we headed for the same spectrum of reports we’re seeing from Australia? Share your thoughts in the comments.
At Sirocco, we work with companies to map climate-related risks across their value chains and translate that analysis into disclosure-ready, investor-grade reporting. If you’re starting to think seriously about UK SRS and want to understand what the preparation process actually involves, I’d be glad to have that conversation – just drop us a message.
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