Enhancing Climate Resilience: Hunter Water’s Journey to AASB-S2 Compliance

In a strategic move to enhance climate resilience and align with evolving financial disclosure standards, Hunter Water, a State-Owned Corporation in New South Wales, collaborated with Pangolin Associates to implement the AASB-S2 climate-related financial disclosure framework. This initiative has positioned Hunter Water as a leader in climate-related financial reporting within the state and the broader water sector.

The Role of Pangolin Associates

Pangolin Associates led a two-stage process to guide Hunter Water through its first year of climate disclosure reporting. The approach involved an initial Stage 1 Gap Assessment, followed by a Stage 2 Implementation Roadmap, ensuring a structured and actionable transition toward compliance.

Stage 1: Gap Assessment against AASB-S2

The first stage of the initiative involved a comprehensive assessment of Hunter Water’s existing processes and capabilities against the four pillars and 103 disclosure requirements of the AASB-S2 standard.
Key activities included:

• evaluating current capabilities and assigning a maturity rating based on a four-level scale;
• identifying priority areas for capability enhancement and estimating the effort required to implement necessary changes;
• providing best practice examples to facilitate capability building and Year 1 disclosure reporting.

Stage 2: Year 1 Disclosure Reporting implementation roadmap

The second stage focused on embedding Climate Disclosure Reporting (CDR) activities within existing corporate processes, ensuring a practical and actionable approach.
Notable elements included:

• integrating CDR activities into current workflows rather than creating a separate program.
• setting up a new CDR governance structure with strong executive leadership.
• engaging stakeholders not typically involved on sustainability matters including Finance, Risk Management, and IT executives.
• facilitating a stakeholder mobilisation and kick-off session.
• establishing 10 key priorities for the first 30 days.
• developing the year 1 report through an iterative process.  

Key Learnings from Year 1 Implementation

One year into the program, Hunter Water is completing its first climate disclosure report. The experience provided valuable insights into effective implementation strategies, including:

1. Governance is Crucial – Strong leadership from executive and board levels was key to successful integration.
2. Cross-Functional Engagement – Involving Finance, Planning & Engineering, Assets, and Risk teams was essential for this cross-organisation topic.
3. Overcoming Challenges – Managing competing priorities and overcoming resistance to change required persistent multi-channel communication and engagement.
4. Effective Communication – Internal newsletters, roadshows, and in-person interactions proved instrumental in securing stakeholder buy-in.
5. Embedding Change – Integrating climate risk considerations into existing corporate processes, such as risk management, helped ensure long-term sustainability.
6. Demonstrating Value – Highlighting tangible benefits and compliance advantages helped build momentum and executive support.

Leading the Water Industry Towards Resilience and Compliance

Through strategic planning and cross-functional collaboration, Hunter Water has positioned itself as a leader in climate-related financial disclosure. Working with Pangolin Associates has not only enhanced the organisation’s ability to meet regulatory requirements but also strengthened its long-term climate resilience.

Recognising the value of industry-wide collaboration, Pangolin Associates and Hunter Water presented key insights and best practices at a Water Services Association of Australia (WSAA) webinar. This initiative aimed to inform other water organisations on their progress  towards climate resilience and regulatory compliance.