Date Published: 07/2025

Climate-related financial disclosures under AASB S2 are gaining momentum. While early focus has centred on the private sector, public sector agencies are also taking action. Across Australia, federal and state governments are progressing climate reporting for public entities, shaping future policy and procurement expectations across sectors.

Several jurisdictions are already advancing implementation. The Commonwealth is coordinating a four-year rollout involving five key agencies. In New South Wales, the top 20 entities are preparing their first year reports. Queensland has identified nine public entities that will begin reporting from 2025–26 in line with AASB S2, while South Australia is finalising its implementation approach.

Hunter Water, a state-owned corporation in New South Wales, is one of the early movers. Working with Pangolin Associates, Hunter Water is among the first to complete its initial Sustainability Report under the NSW regime. This case study outlines its approach, from identifying data gaps to embedding governance structures aligned with AASB S2 requirements.

Advancing Climate Resilience and AASB S2 Compliance

As part of its commitment to climate resilience and transparent disclosure, Hunter Water partnered with Pangolin Associates to implement the AASB S2 climate-related financial disclosure framework. This work has positioned Hunter Water as a leader in climate reporting within New South Wales and across the water sector.

The Role of Pangolin Associates

Pangolin Associates designed and led a structured two-stage approach to support Hunter Water through its first year of reporting. This included an initial Stage 1 gap assessment followed by a Stage 2 implementation roadmap, ensuring a practical and coordinated pathway to compliance.

Stage 1: Gap Assessment Against AASB S2

The first stage involved a detailed gap assessment of Hunter Water’s existing processes and capabilities against the four pillars and 103 disclosure requirements of AASB S2.

Key activities included:

• Evaluating current capabilities and assigning a maturity rating using a four-level scale.

• Identifying priority areas for capability uplift and estimating implementation effort.

• Providing best practice examples to support capability development and Year 1 reporting.

Stage 2: Year 1 Disclosure Reporting Implementation Roadmap

The second stage focused on embedding climate disclosure reporting within existing corporate processes, ensuring integration rather than duplication. Key elements included:

• Integrating climate disclosure reporting activities into existing workflows.

• Establishing a dedicated governance structure with strong executive oversight.

• Engaging stakeholders across Finance, Risk Management and IT.

• Facilitating stakeholder mobilisation and a formal project kick-off.

• Identifying ten priority actions for the first 30 days.

• Developing the Year 1 report through an iterative, evidence-led process.

Key Learnings from Year 1 Implementation

Through its first year of implementation, Hunter Water has gained valuable insights into effective climate reporting practices:

• Governance is critical: Strong leadership at executive and board levels supported successful integration and decision-making.
• Cross-functional engagement is essential: Involvement from Finance, Planning and Engineering, Assets, and Risk teams ensured a whole-of-organisation approach.
• Managing change requires persistence: Competing priorities and resistance to change were addressed through consistent, multi-channel engagement.
• Communication drives engagement: Internal newsletters, roadshows and in-person sessions helped build awareness and stakeholder support.
• Embedding delivers long-term value: Integrating climate considerations into existing processes, such as risk management, supports ongoing sustainability.
• Demonstrating value builds momentum: Highlighting practical benefits and compliance outcomes strengthened executive support.

Leading the Water Industry Towards Resilience and Compliance

Through a structured and collaborative approach, Hunter Water has positioned itself at the forefront of climate-related financial disclosure in the water sector. Its work with Pangolin Associates has strengthened its ability to meet regulatory requirements while building long-term resilience.

Recognising the importance of industry collaboration, Hunter Water and Pangolin Associates shared key insights and practical learnings at a Water Services Association of Australia webinar in October 2024, supporting broader sector capability uplift.

Getting Ahead of the Curve

Public sector organisations are increasingly expected to understand and act on climate-related risks and opportunities. Industry bodies such as the Water Services Association of Australia and Australasian Campuses Towards Sustainability are already supporting coordinated responses.

Taking early action enables organisations to build internal capability, address emerging risks and establish clear pathways for implementation. Understanding the implications of AASB S2 and starting early positions organisations for a more efficient and effective transition. Hunter Water’s experience provides a practical example of how to approach this journey, offering insights that can support others as they prepare for climate disclosure and build resilience over time.