The 12-Month ASRS Group 3 Operational Plan: A...

If your financial year starts on or after 1 July 2027 and you fall into ASRS Group 3, the first AASB S2 climate disclosure you will lodge sits roughly 18 months away. Twelve of those months should be preparation. The other six is the actual reporting period.

Most mid-market CFOs are running the same internal monologue. We know it's coming. We're not sure if we're in scope. The auditors haven't said anything specific yet. We'll worry about it next budget cycle. That stance was fine in 2025. It is now genuinely risky, because the assurance pipeline is filling up fast.

This piece is for finance directors at companies that meet two of three thresholds: 100+ employees, $50M+ consolidated revenue, or $25M+ consolidated gross assets (per the AASB S2 scoping criteria for Group 3). It assumes you have not started. It also assumes the good news, which is that Group 3 has by far the easiest run-up of any cohort, because Group 1 and Group 2 have already absorbed most of the methodology pain.

Why Group 3 is the easy cohort (and the trap inside that statement)

Group 1 went first with no precedent, no settled assurance practice, and uneven auditor capacity. Group 2 inherited a maturing market but still had to fight for assurance slots. Group 3 walks into a market where boundary conventions are well understood, where the AUASB has issued and refined ASSA 5010, where AASB 2024-3 and AASB S2025-1 transitional reliefs are clearly documented, and where most mid-tier audit firms have a sustainability practice with real billable hours.

That is the easy bit. The trap is that "easier" does not mean "do it in three months". The minimum viable preparation runtime is still 12 months, because you need a full year of activity data, an internal trial cycle, and a dry run with your assurance provider before the period you'll actually report on starts.

So: June 2026 to June 2027 is the planning window. Here is how we'd sequence it.

June 2026: Scoping and the organisational boundary decision

The first decision is whether you're actually in scope. AASB S2 paragraph 16 sets the consolidation principle: the reporting entity for sustainability disclosures should match the reporting entity for general purpose financial statements. If you consolidate a subsidiary in the financial accounts, you consolidate its emissions.

Then choose your consolidation approach. The default for almost every Group 3 entity is operational control, which aligns with the GHG Protocol Corporate Standard and with NGER. Equity share or financial control are options under AASB S2 paragraph B12, but operational control is what your auditor will expect to see unless you have a specific reason (joint ventures, partial ownership of facilities) to deviate. If you already report under NGER, keep the same boundary. Don't create two parallel inventories.

The output of this month is one memo. Two pages, signed by the CFO. It names the reporting entity, lists each consolidated subsidiary and JV, states the consolidation approach, and notes any deviations from the financial reporting boundary. That memo is the spine of every assurance conversation for the next 18 months.

July 2026: Inventory scope and materiality

AASB S2 requires Scope 1, Scope 2, and material Scope 3 emissions. Scope 1 and 2 are non-negotiable. Scope 3 is where judgement lives, and where consultants earn their fees.

This is where we'd strongly recommend bringing in a sustainability consultant. Not to do the carbon accounting (your finance team plus software handles that), but to run a proper materiality assessment and give you a defensible rationale for which of the 15 Scope 3 categories you'll include, exclude, or defer. The AASB 2024-3 transitional relief lets Group 3 entities defer Scope 3 reporting for one year, which is worth using. But you still need to identify and disclose which categories you expect to be material, and you need the methodology document the auditor will read.

For most mid-market entities, four to six Scope 3 categories end up genuinely material: purchased goods and services (cat 1), fuel and energy related activities (cat 3), business travel (cat 6), employee commuting (cat 7), and waste (cat 5). Categories 11 (use of sold products) and 12 (end-of-life) matter intensely if you sell physical goods, and not at all if you sell services. Don't include categories just because they exist. Honest exclusion with a stated rationale is stronger than a half-baked number.

August 2026: Baseline year selection and assurance provider shortlist

The baseline year question matters more than people think. Your baseline becomes the reference point for every trend disclosure, transition plan, and target you ever publish. AASB S2 paragraph 21 effectively requires you to disclose comparative information for the immediately preceding period, which for Group 3 means the year ending 30 June 2027 if your reporting year is FY28.

So your baseline collection year is FY27. Which means activity data collection needs to start by 1 July 2026 at the latest. If you wait until January 2027 to start, you've lost six months of utility bills, fuel cards, and refrigerant logs that you'll then have to reconstruct under audit scrutiny. Reconstruction is expensive, error-prone, and the auditor will mark down your evidence quality.

In parallel: start the assurance provider conversation now. The relevant standard is ASSA 5010, issued by the AUASB. Limited assurance is required for Group 3 from the first reporting period. The list of registered providers is shorter than the audit market generally, and the big four plus the mid-tier sustainability practices are already booking 2028 engagements. Get three quotes by the end of August. We have more on provider selection here.

September 2026: Governance setup

By the time the first disclosure lands, AASB S2 paragraph 6 requires you to describe the governance processes, controls, and procedures used to monitor, manage, and oversee climate-related risks and opportunities. That sentence sounds bureaucratic but it has teeth. The auditor will ask for board minutes, committee charters, and management role descriptions, and they'll cross-check the dates.

Practical steps for September:

Add climate as a standing agenda item for the board or audit committee. Minute the discussion every meeting.
Decide whether climate sits with the audit committee, the risk committee, or a new sustainability committee. For most Group 3 entities, folding it into the existing audit committee is the cleanest path. The audit committee playbook covers what good looks like.
Name a management owner. This is usually the CFO, sometimes the COO, occasionally a dedicated head of sustainability. Whoever it is, write it into the position description.
Issue or refresh the climate-related risk and opportunities policy.

None of this is glamorous. All of it is evidence the auditor will ask for in Q1 of the reporting year.

October 2026: Data collection systems setup

This is where most of the practical work lives, and it's where software earns its keep. You need durable, repeatable, audit-grade processes for four data streams:

Electricity, gas, water invoices from every site you operate. The NGA Factors workbook gives you state-based grid factors that change annually.
Fleet fuel from fuel cards, bowser data, or contractor invoices. Diesel and petrol consumption converts cleanly to Scope 1 using NGA Schedule 1.
Refrigerant top-ups from HVAC service reports. Often missed, often material, especially for property and hospitality. R-410A has a 100-year GWP of 2,088 under AR5 and 2,256 under AR6, and the AR5/AR6 toggle question matters here.
Supplier-provided data for whichever Scope 3 categories you've chosen to include. Start by writing to your top 20 suppliers by spend asking for their emissions data or CDP score.

Carbonly is built for exactly this layer. You point our AI document engine at utility bills, fuel dockets, refrigerant invoices, and supplier reports across 8 file formats (PDF, CSV, Excel, Word, PPT, RTF, plus images). Set up a project-specific email ingestion address so invoices forward automatically. Point a OneDrive or SharePoint folder at it and files sync as they land. Each emission record carries a 7-year audit trail back to the source document, which is the evidence pack ASSA 5010 wants to see. Six-role RBAC keeps the finance team, sustainability lead, site managers, and the external assurer in their lanes.

What Carbonly does not do, and we want to be clear about this, is write your AASB S2 disclosure narrative for you. The strategy, risk, and metrics sections of the disclosure require human judgement, and that's where your consultant and your finance team earn their fees. We give them the data layer underneath. They write the document.

November 2026: Supplier engagement kick-off

Scope 3 category 1 (purchased goods and services) is usually the single biggest line item in a mid-market emissions inventory, and it's the one where data quality varies most. November is the right month to launch supplier engagement because suppliers go into year-end shutdown in December and won't respond until February.

Carbonly's supplier portal lets you send standardised emissions requests, track responses, and capture supplier-provided activity data inside the same ledger as your direct invoices. If suppliers can't or won't respond, you fall back to spend-based factors with a clearly documented methodology. The auditor will accept that, provided you've shown evidence of attempted primary data collection.

This is also a good month to brief your procurement team. They are the long-term owner of supplier emissions data quality, not sustainability or finance.

December 2026: First internal trial calculation

By December you've collected roughly six months of Scope 1, 2, and partial Scope 3 data. Run a full trial calculation on it. Pretend you have to publish.

The point isn't accuracy. The point is to find every broken pipe in your data collection process before they become problems under assurance. Common issues that surface in a trial run: a site missing from the meter list, a fuel card not feeding through, a subsidiary that thinks it's reporting separately but isn't, refrigerant logs that don't capture the gas type. Fix them now. Iterating in December costs nothing. Iterating in October 2028 costs your auditor's hourly rate plus your weekend.

Generate a draft NGER report at the same time even if you're below threshold. The discipline of preparing an NGER-style submission forces the data to be clean, complete, and reconcilable. The overlap between NGER and AASB S2 is high enough that this work is not wasted.

January–February 2027: Materiality refresh and scenario analysis kick-off

AASB S2 requires climate-related scenario analysis under paragraph 22. For Group 3, transitional relief permits a qualitative approach in year one, but you need to have actually done the work. Two scenarios is the minimum: a high warming pathway and a Paris-aligned pathway.

This is consultant territory again. Scenario assumptions, transition risk identification, and quantified impact estimates all benefit from external expertise. Your job is to make sure the scenarios connect to actual business decisions (capex plans, asset locations, customer demand) rather than sitting in a separate document the board never reads.

Use February to refresh your materiality assessment now that you have six months of trial data. Categories that looked material in July may have shrunk. Categories you dismissed may have grown.

March 2027: Dry run with the assurance provider

This is the most important month in the entire plan. Engage your chosen assurance provider for a paid dry run on your trial data. Not the real engagement letter for FY28. A separate scoping engagement where they look at your boundary memo, your materiality assessment, your data collection processes, your evidence trail, and tell you exactly what they will and will not sign off when the real period begins.

Budget AUD 15,000 to AUD 40,000 for this. It is the cheapest money you will spend in the entire program because it surfaces the unfixable issues while they are still fixable. Carbonly's Auditor Workspace gives the external assurer their own login with read-only access to source documents, calculation logic, and the full audit trail. Evidence Pack export hands them everything in the ASSA 5010 evidence format.

April–May 2027: Remediation and engagement letter

Whatever the dry run flagged, fix in April. Re-run the trial calculation in early May. Sign the formal engagement letter for the FY28 assurance opinion by end of May. You want the engagement letter executed before 1 July 2027 so the assurance scope is settled from day one of the reporting period.

June 2027: Year-end readiness check and FY28 kick-off

Final preparation month. Lock the prior period in the Carbonly platform so no one can retroactively edit baseline data (period locking is non-negotiable for audit integrity). Brief the board one last time. Confirm the climate committee is meeting on its scheduled cadence. Issue the FY28 data collection calendar to every site manager and finance lead.

On 1 July 2027, the meter starts. Everything you've built in the prior 12 months is now muscle memory.

What this costs

We won't quote you a specific number because every mid-market business has a different footprint. As a rough order of magnitude for a Group 3 entity with 100–500 employees and operations on 5–20 sites:

Cost line	Indicative annual range (AUD)
Carbon accounting software	12k–60k
External assurance (limited, year 1)	35k–120k
Sustainability consultant (materiality, scenarios, narrative)	25k–90k
Internal time (CFO, finance team, site managers)	usually undercounted, often 100+ hours in the prep year

If your total program cost is landing above AUD 250k in year one, you have either an unusually complex footprint or you're being over-served. If it's landing below AUD 60k, you're probably under-investing in assurance and you'll pay for it the following year. The full cost breakdown post has more detail by company size.

The one thing that goes wrong

The single most common failure pattern we see in conversations with finance directors at this stage is treating the 12-month plan as a sustainability project rather than a finance project. AASB S2 is a financial reporting standard. The CFO owns it. The audit committee oversees it. The assurance opinion is published alongside the financial statements. If sustainability owns the project alone, the controls aren't strong enough and the auditor's opinion will reflect that.

Pull it into the finance function. Use existing controls and review cycles. Treat emissions data like revenue data. The rest is just sequencing.

External references: the IFRS Foundation IFRS S2 standard, ASIC Regulatory Guide 280, the Clean Energy Regulator NGER guidance, and the AUASB sustainability assurance standards.

Reach us at hello@carbonly.ai, or read the companion CFO playbook for the first AASB S2 disclosure.

The 12-Month ASRS Group 3 Operational Plan: A Month-by-Month Setup Guide for Mid-Market CFOs