Businesses are paying more attention to climate change and how it affects their operations. To help Australian organisation communicate their climate actions, two main frameworks are shaping this shift: Task Force on Climate-related Financial Disclosures (TCFD) and the Australian Accounting Standards Board’s AASB S2. These frameworks aim to enhance transparency and consistency in climate reporting, enabling stakeholders, from investors to regulators, to better understand how organisations are managing their climate impact.
A cornerstone of both frameworks is the Metrics and Targets pillar. This pillar focuses on how organisations measure, set goals, monitor, and manage their climate-related performance.
This article explores practical guidance for implementing the Metrics and Targets pillar effectively, helping organisations move from compliance to leadership in climate reporting.
TCFD Framework: The Global Standard
The TFCD Framework is a globally recognised sustainability reporting framework, widely adopted by organisations around the world. It was designed to improve transparency and comparability of climate-related financial information, enabling stakeholders to make informed decisions. The framework is built around four core pillars: Governance, Strategy, Risk Management, and Metrics and Targets.
Under the Metrics and Targets pillar, organisations are expected to report the quantitative metrics they use to assess climate risks and opportunities. This includes greenhouse gas (GHG) emissions across Scope 1 (direct emissions), Scope 2 (indirect emissions from energy use), and Scope 3 (value chain emissions), as well as the targets they’ve set to reduce their climate impact.
Source: TCFD’s Final Report, Recommendations of the Task Force on Climate-related Financial Disclosures
This marks a shift for many organisations, from basic reporting to strategic climate management, requiring reliable data, clearly defined boundaries, and a consistent methodology for tracking progress. Done well, it builds stakeholder trust, strengthens investor confidence, and support a more resilient business model.
Where AASB S2 Fits in: Aligning with TCFD
The AASB S2 aligns closely with TCFD framework particularly under the Metrics and Targets pillar. AASB S2 provides a structured approach for organisations to report their climate performance, outlining expectations for:
- Metrics used to assess climate-related risks and opportunities, aligned with strategic and risk management processes.
- Greenhouse gas (GHG) emissions across Scope 1, Scope 2, and Scope 3, including associated risks.
- Targets set to manage climate-related risks and opportunities, along with progress toward achieving them.
These disclosures are designed to enhance transparency, comparability, and decision-usefulness for investors and stakeholders. Like TCFD, AASB S2 emphasises that reporting is not just about compliance—it’s about demonstrating progress, building credibility, and aligning with global climate goals.
Building a Reliable Carbon Emissions Inventory
A key part the Metrics and Targets pillar is building a reliable greenhouse gas (GHG) emissions inventory, it is a foundational step for any organisation committed to understanding and managing its climate impact. The following process, based on the Greenhouse Gas Protocol, outlines how an organisation can develop a comprehensive and credible emissions profile.
Step 1: Determine the reporting boundary
Set the scope of your emissions inventory, including the reporting period, base year, organisational structures, and operational boundary.
Step 2: Identify sources of emissions
List all relevant emission sources across Scope 1, 2, and Scope 3, based on impact and stakeholder needs.
Source: Greenhouse Gas Protocol, Corporate Value Chain (Scope 3) Accounting and Reporting Standard
Step 3: Select calculation approach
Choose a method that fits your data – most use emission factors for practicality and consistency.
Step 4: Collect activity data
Gather activity data and choose emission factors, using national databases or supplier information where available.
Step 5: Apply calculation tools
Emissions can be calculated manually or with spreadsheets. The standard formula used is:
GHG emissions = Activity Data × Emission Factor × Global Warming Potential
Step 6: Roll-up data to corporate level
Aggregate emissions across all scopes and units using consistent systems to ensure accuracy and transparency.
Establishing a baseline carbon emissions inventory enables organisations to accurately quantify their emissions and understand their climate impact. It is essential that reported data is relevant to key stakeholders, comprehensive, and compiled using consistent methodologies with a clear audit trail to ensure accuracy and credibility.
Setting Effective Emissions Reduction Targets
With the importance of metrics established by both TCFD and AASB S2, the next step is for organisations to measure and manage their climate impact in practice. Globally recognised standards such as the Greenhouse Gas (GHG) Protocol and the Science Based Targets initiative (SBTi) provide the practical tools needed to build robust emissions inventories and set credible, science-aligned targets.
Setting GHG Targets with the GHG Protocol
Establishing meaningful greenhouse gas reduction targets starts with leadership and ends with measurable impact. The GHG Protocol helps organisations translate climate ambitions into actionable, measurable goals that support both regulatory compliance and long-term sustainability. By integrating these targets into core operations and decision-making, organisations can demonstrate real progress, accountability, and climate leadership.
The steps below outline how organisations can confidently set and manage GHG reduction targets in line with best practice.
1. Obtain Senior Management Commitment
Climate action starts at the top. Support from the CEO and board drives accountability, enables resource allocation, and sets the tone for change across the business.
2. Decide on the Target Type
Choose between absolute targets (total emissions reduction) and intensity targets (emissions per unit of output), with absolute targets preferred for transparency.
3. Decide on the Target Boundary
Define which emissions, operations, and regions are included, and whether to cover all greenhouse gases or just CO₂.
4. Choose the Target Base Year
Select a fixed or rolling base year to track progress, balancing consistency with flexibility.
5. Define the Target Completion Date
Set a timeframe that aligns with strategic goals—short-term for quick wins, long-term for deeper transformation.
6. Define the Length of the Target Commitment Period
Decide how performance will be measured—annually, over multiple years, or on a rolling basis.
7. Decide on the Use of Offsets or Credits
Offsets can support reductions but must be transparently reported and clearly separated from internal efforts.
8. Establish a Target Double Counting Policy
Avoid double counting by setting clear rules for shared sources, offsets, and traded allowances.
9. Decide on the Target Level
Use data and modelling to set a target that’s ambitious yet achievable, informed by industry benchmarks.
10. Track and Report Progress
Integrate targets into regular reporting, clearly separating internal reductions from offsets to build trust.
Source: The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard (Revised Edition), Setting a GHG Target
Setting Science-Based Targets: A Five-Step Framework
The Science-Based Targets initiative (SBTi) offers a practical framework for organisations looking to align their climate goals with the latest scientific guidance. By following a structured five-step process, entities can set emissions reduction targets that are both credible and consistent with global efforts to limit warming to 1.5°C.
This framework enables organisations to set science-based targets that are not only technically sound but also aligned with global climate objectives, turning ambition into measurable impact.
Conclusion: From Reporting to Resilience
Climate metrics and targets are more than just numbers—they reflect how prepared a business is for a low-carbon future. By embracing frameworks like TCFD and AASB S2, organisations can move beyond compliance to demonstrate genuine climate leadership.
Implementing robust emissions inventories, setting science-based targets, and reporting progress transparently builds trust and positions businesses for long-term success. However, setting metrics and targets is only the beginning. Continuous monitoring and regular review are essential to ensure real progress and maintain credibility. Now is the time to turn climate reporting into a strategic advantage, building resilience and aligning with global climate goals.
