Australia’s New Mandatory Climate Reporting: What It Means for Your Business

Australia’s House of Representatives has passed a landmark bill that introduces mandatory climate-related reporting requirements for large and medium-sized companies. This legislation is set to increase transparency around corporate exposure to climate risks, opportunities, and greenhouse gas emissions across the value chain. From 2025, the largest companies will be required to comply.

This new law, which follows Senate approval in August, represents the final major step towards making climate reporting a legal requirement. But what does this mean for businesses in Australia? Here’s everything you need to know.

Understanding Australia’s New Climate Reporting Requirements

The climate reporting rules will be phased in, giving companies time to prepare. Initial reporting obligations will begin in January 2025 for large businesses—those with over 500 employees, more than AUD 500 million in revenue, or assets exceeding AUD 1 billion. These companies will be required to disclose:

• Climate-related risks and opportunities: Both physical risks (such as extreme weather events) and transitional risks (related to shifts towards green technologies or regulatory changes) must be disclosed, along with any opportunities for growth in a greener economy.
• Greenhouse gas emissions: Companies must report emissions from their direct operations (Scope 1) and energy use (Scope 2). Indirect emissions from their supply chain (Scope 3) will also be required, with a phased approach starting in 2026.

Medium-sized companies will have until July 2026 to start reporting, while smaller companies (those with over 100 employees or significant revenue/assets) will begin one year later.

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Why Scope 3 Emissions Matter

Scope 3 emissions are particularly significant because they encompass indirect emissions generated throughout a company’s value chain, from suppliers to product end-use. Although these emissions can be challenging to measure, they often represent the largest portion of a company’s carbon footprint. Recognising this, the Australian government has provided an additional year for businesses to start reporting on Scope 3 emissions.

To ease the transition, companies will also benefit from a three-year grace period, protecting them from litigation concerning Scope 3 reporting inaccuracies.

Australia’s Net Zero Economy Authority: Supporting the Transition

In tandem with the new climate reporting requirements, Australia has also established a Net Zero Economy Authority. This authority will guide the nation’s economic transformation towards net-zero emissions, helping industries and workers prepare for the shift to cleaner energy sources. The key roles of the authority include:

• Reskilling workers: Particularly in emissions-intensive sectors, to equip them with the skills needed for employment in the growing green economy.
• Collaborating with businesses: Helping companies and investors capitalise on opportunities created by the transition to net zero.
• Supporting regional communities: Ensuring that regions reliant on traditional industries can transition smoothly, attracting new clean energy investments and creating sustainable jobs.

The Net Zero Economy Authority will play a critical role in helping Australia meet its climate goals, which include reducing emissions by 43% by 2030 and achieving net zero by 2050.

What Does This Mean for Australian Businesses?

For Australian companies, the new climate reporting legislation brings several implications:

• Greater transparency: Businesses will need to provide detailed disclosures about their climate-related risks, impacts, and opportunities. This will improve visibility for investors focused on sustainability, who will use this information for risk assessments and stewardship activities.
• Investment in compliance systems: To meet these new requirements, companies will need to invest in systems to track, manage, and report emissions data. This could involve adopting new technologies or working with consultants to improve data accuracy, especially for Scope 3 emissions.
• Leadership opportunities: Businesses that take proactive steps to reduce their emissions can enhance their appeal to climate-conscious investors, customers, and stakeholders, positioning themselves as leaders in sustainability.

What’s Next?

With the Australian Accounting Standards Board (AASB) set to finalise the climate disclosure standards shortly, businesses should begin preparing now for the 2025 rollout. Evaluating current emissions data, identifying potential climate risks, and putting systems in place for tracking and reporting will be essential steps.

While the new rules may seem challenging, they offer companies an opportunity to demonstrate their commitment to sustainability. By embracing these changes, Australian businesses can position themselves for success in a world where climate action is not just a necessity but a key driver of future competitiveness.

How Zevero can help

Zevero is a carbon management platform that empowers organisations to measure, reduce, and report their emissions across Scope 1, 2, and 3. Our AI-driven technology automates data collection and delivers carbon emission calculations with granular accuracy, ensuring compliance with global reporting frameworks. 

Supported by sustainability experts, Zevero transforms data into actionable insights, helping businesses identify emission hotspots, simplify Scope 3 reporting, and develop decarbonisation strategies that drive progress toward climate goals and strengthen their appeal to climate-conscious stakeholders and investors. Want to find out more, get in touch today.