Free resources
Free AASB S2 & Safeguard Carbon Cost Reporting Tool
Misha Cajic
May 6, 2025
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4
min read
Carbon costs are no longer just an ESG talking point — they’re a financial reality. For Australian organisations reporting under AASB S2 or regulated by the Safeguard Mechanism, the pressure to understand and manage carbon-related financial exposure is rising fast. That’s why Avarni has released a free tool designed specifically to bridge sustainability and finance. It empowers organisations to quantify both internal and regulatory carbon costs — clearly, accurately, and in alignment with AASB S2.
This article introduces our AASB S2 & Safeguard Carbon Cost Reporting Tool, walking through how it works, who it’s for, and why it matters.
The tool helps organisations forecast and analyse their carbon-related financial exposure across three key years: 2030, 2040, and 2050. It’s designed to integrate two major carbon cost streams — internal carbon pricing (ICP) and compliance costs under the Safeguard Mechanism.
By combining these elements, users can conduct scenario analysis, estimate liabilities, and translate emissions into financial terms. It directly supports disclosures required under AASB S2 Clauses 21, 29, and 33, making it a practical resource for both strategic planning and compliance.
The result? A clear, consolidated view of total carbon cost exposure — helping teams drive investment decisions and prepare for future reporting obligations.
This tool is made for the professionals who sit at the intersection of climate and finance. Whether you're on a sustainability team, in corporate finance, or advising on ESG, this tool helps you move from emissions data to financial impact.
Organisations reporting under the Australian Sustainability Reporting Standards (ASRS), particularly AASB S2, will find the tool helpful for quantifying carbon pricing disclosures. And for companies regulated under the Safeguard Mechanism, it provides an easy way to forecast Australian Carbon Credit Unit (ACCU) liabilities across baseline thresholds.
Even better — it’s structured to be accessible to non-sustainability professionals. The tool uses plain language, a logical flow, and pre-built formulas, so users can generate actionable insights without needing a background in emissions accounting.
The AASB S2 & Safeguard Carbon Cost Reporting Tool consists of three core calculators: an internal carbon pricing engine, a Safeguard compliance cost model, and a total exposure summary.
The Internal Carbon Pricing Calculator allows users to select between government projections, market expectations, or a custom carbon price pathway. It calculates a notional cost of emissions (Scope 1, 2, and 3) over time, supporting shadow pricing and climate-aligned capital planning. It’s a direct response to Clause 29(f) of AASB S2, which calls for disclosure of internal carbon prices used to assess climate risk.
Next is the Safeguard Compliance Calculator, which is built for entities subject to the Safeguard Mechanism — typically facilities emitting over 100,000 tCO₂e of Scope 1 emissions per year. This component calculates ACCU liabilities based on emissions exceeding baseline thresholds, applying forecasted ACCU prices across reporting years.
Finally, the Total Carbon Exposure Summary consolidates both cost streams, providing a complete picture of an organisation’s voluntary and regulatory carbon costs. It’s structured to support board-level discussions, climate risk assessments, and financial disclosures — all in one view.
Using the tool is straightforward. Start by filling in the Assumptions sheet, including emissions forecasts, carbon price selections, and offset strategies. If the company is a Safeguard-regulated entity, enter the applicable baseline and ACCU price trajectory.
From there, review the Carbon Cost Calculations tab to see both the internal and regulatory cost outcomes across 2030, 2040, and 2050. The Summary Table brings these costs together, helping users visualise the overall exposure and conduct what-if analysis on different price pathways or offset scenarios.
Each section also encourages users to record data sources and assumptions for transparency — key for compliance with AASB S2 and for aligning with best practices in climate risk governance.
The AASB S2 standard mandates disclosures around both current and anticipated carbon costs, including the use of internal carbon prices and expected regulatory liabilities. But many organisations are still struggling to quantify these exposures, especially in ways that resonate with CFOs and risk committees.
This free tool is built to fill that gap. It turns emissions into dollar figures, aligns with regulatory expectations, and delivers outputs that support financial planning and investment decision-making.
It also helps organisations differentiate between strategic pricing — used for evaluating projects or setting internal carbon budgets — and regulatory liabilities, which are actual financial obligations that must be reported and addressed.
Whether you’re drafting your first climate-related financial disclosure or refining your internal carbon pricing framework, this tool gives you a clear starting point and structured methodology.
