In the first few months of the ‘24-’25 financial year, the Australian Federal Government passed two major pieces of legislation: the Climate-Related Financial Disclosures Bill, and the Sustainability Reporting Standards. Together, these define the new requirements for businesses who need to report on their climate impact, and they will fully come into effect as of January 1 2025. While the government offices in charge of collecting and auditing these reports will be quite lenient on  reporting in the early days of this new system, it’s definitely better for businesses to start on the right foot than to fall behind and have to scramble once the processes become demanding. Here’s an overview of this new legislation, and everything you’ll need to know to coordinate your business’s new reporting needs.

An Overview of Australia’s Climate Legislation

The new legislation covers a range of requirements for businesses to adhere to while preparing their reporting, the most vital of which is the timeline. Here are the key dates to be aware of:

1. January 1 2025: The legislation takes effect, and reporting will need to begin being tracked for Group 1 businesses (explained below)
2. July 1 2026: Reporting will be required for Group 2 businesses.
3. July 1 2027: Reporting will be required for Group 3 businesses.

These dates aren’t necessarily the first time a business will need to start thinking about their climate reporting, just when it becomes mandatory. A business who starts their climate reporting efforts earlier will be able to present better-quality data and have an easier time assembling their reports once the due date arrives. Leaving your reporting to the last minute will lead to scrambling, low-quality data that will only make it harder to successfully report in future years, so we highly advise beginning as early as possible.

Reporting Groups and Thresholds

The minimum requirements for the three main groups of businesses are:

• Group 1 (starts January 2025): Businesses with 500+ employees, AUD 500 million revenue, or AUD 1 billion in assets.
• Group 2 (starts July 2026): Businesses with 250+ employees, AUD 200 million revenue, or AUD 500 million in assets.
• Group 3 (starts July 2027): Businesses with 100+ employees, AUD 50 million revenue, or AUD 25 million in assets.

To qualify for a group, a business must meet at least two of the three criteria – i.e. if a business has  300 employees but has a revenue of AUD 500 million and owns AUD 1 billion in assets, they still qualify for Group 1.

The other important group to consider is what’s known within climate reporting as the Value Chain or Scope 3: businesses who don’t fit within the legislation’s outlined criteria, but supply their products or services to businesses who do. If you are a small manufacturer supplying niche machine parts to pharmaceutical factories, for instance, you may not meet any of the requirements to be part of a Group as defined above. However, your clients do meet those criteria, and as part of their reporting, will need to get information from you about your carbon output.

The Impact of Scope 3 Emissions

The pressures of the supply chain have been a key talking point since the beginning of the COVID pandemic, but in the day-to-day it’s easy for businesses to forget that they’re part of a larger whole, no matter their size. Scope 3 businesses were a huge missing link in previous legislations, and their inclusion in the new requirements is a key reason why this updated push will (we believe) lead to more accurate reporting at a national level. It may seem like a hassle for a small business to gather data and report back to customers with their emissions information, but accurate data from SMEs cross-sector will mean clearer actions for the future of Australia’s carbon emissions response plan.

How to Get Started

To begin preparing for your climate reporting compliance, you’ll need to action the following:

• Assign ownership: Identify the department responsible for climate reporting (e.g., finance, procurement, sustainability officers, operations management).
• Data collection: Identify which business operations you will need to collect data from and how that collection will be handled. Be sure to account for multiple sites, other entities within the same parent company, and other “out of sight, out of mind” considerations that may impact your final footprint.
• Establishing emissions boundaries: Traditional organisational boundaries won’t necessarily apply to climate reporting – that is to say, you will need to consider Scope 3 when compiling your data. All businesses up and down the value chain will impact you and be impacted in turn, so their data overlap is vital to ensuring your report is accurate.

Once you have this preliminary information compiled, you’ll need to structure your reporting around the three main pillars of climate reporting:

• Governance: The top-down commitment from senior management to drive internal climate initiatives, including solid information and hard data on any existing programs.
• Metrics and Targets: A baseline for your emissions and how you can track their progress over time. These will evolve and need to be reassessed annually, and the earlier you begin reporting the more robust your data set will be.
• Strategy and Risk: Identifying the programs and support required to meet emissions reduction targets. The Federal Government has acknowledged that compliance is a long-term target, so strategies don’t necessarily need to meet full compliance standards immediately so long as a strategy is present for doing so.

Australia’s new climate reporting legislation is a real step forward for our country’s ability to address the climate crisis. Acting early serves to help organisations identify inefficiencies within their supply chain that can lead to cost savings, with the added benefit of also reducing emissions at the same time. Smaller businesses who take the initiative to begin their reporting early will see that not only is their process smoother, but their dataset is more robust and their final report a better indicator of what they’re doing to address their footprint. And we want to make sure that every climate report writer reading this knows: you don’t have to do this alone.

Carbonhalo began with the mission to make this process as simple as possible for everyone, and to clear the industry of the jargon and ambiguity that sows confusion and worries among companies. If you’d like some assistance compiling your climate impact reports, you can reach out to us through our website at www.carbonhalo.com, and we’ll be in touch.