What Small Businesses Need to Know About Australian Sustainability Reporting Standards.
Australia has introduced new laws that require companies to report on their impact on the climate. These reports will focus on climate change, including how companies understand and manage their climate-related financial risks.
Why Does This Matter?
Imagine you are playing a sport, and your coach wants to track your progress. They would ask for your training schedule, diet, and game performance. Now, imagine businesses being asked to track and report their environmental actions in the same way.
- Companies are transparent about how they affect the environment.
- Investors and the public can see which businesses are serious about reducing pollution.
- There are rules in place to prevent companies from pretending to be “green” when they aren’t (this is called greenwashing).
What Do Companies Need to Report?
Businesses must share information about:
- Their greenhouse gas emissions – This includes the pollution they directly produce (like factory smoke) and emissions from their suppliers and customers.
- Climate-related risks – If extreme weather or new laws could affect their business, they must talk about it.
- Their plans for sustainability – How they plan to reduce their carbon footprint and transition to cleaner energy.
Who Needs to Follow These Rules?
Not all companies need to report immediately. The new law is being introduced in phases:
- Biggest companies (earning $500 million+ per year) must start reporting in 2025.
- Medium-sized companies (earning $200 million+) start in 2026.
- Smaller businesses (earning $50 million+) will start in 2027.
If a company makes less than $50 million a year, they don’t have to report—but they might choose to, especially if their customers demand it.
How Will These Reports Be Checked?
Think of a school exam—you need a teacher to check your answers. In the same way, businesses need independent auditors to check their reports to make sure they’re accurate and honest.
- 2025-2030 Companies will have their reports reviewed, but the checking process will be light.
- By 2030, all businesses covered by the law must have full audits to confirm their reports are correct.
New Climate Reporting Rules Will Affect You SMESs – Here’s How!
New government regulations mean that large companies must report their carbon footprint, including emissions from their suppliers. If your business sells products or services to a large company, they will ask you about your emissions too!
This means small businesses (SMEs) will also feel the effects of these new climate reporting rules.
How Does This Work?
Large Companies Must Report Their Emissions
Big businesses (like supermarkets, manufacturers, and corporate brands) now have to measure and report their carbon footprint under government regulations.
They must track three types of emissions:
- Scope 1: Direct emissions (fuel used, company vehicles, etc.)
- Scope 2: Indirect emissions from electricity use.
- Scope 3: Emissions from suppliers and business partners (this is where SMEs come in!).
Large Companies Will Ask Their Suppliers (Including SMEs) for Data
Since big companies must report their Scope 3 emissions, they will start asking their suppliers (which includes SMEs) about their carbon footprint.
If you sell to or work with a large company, expect questions like:
- What’s your carbon footprint?
- Do you track your emissions?
- Do you have a plan to reduce them?
This Will Flow Down to Even Smaller Businesses
If you work with larger suppliers, they will also be asked to report their emissions—so they will turn to their own suppliers (which may include you) to get data.
This means that even if you don’t work directly with a large company, your clients might—and they will need your data.
What Does This Mean for Your Business?
Sustainability = Business Reinvention
Many small business owners think carbon reporting is just about numbers—but it’s really about improving your business.
This is an opportunity to:
- Reduce energy costs (lower bills)
- Use resources efficiently (less waste = more profit)
- Attract new customers (who prefer sustainable brands)
- Win contracts with big clients (who need your data)
- Think About Sustainability in Your Business – Companies that show lower carbon footprints will be more attractive to big buyers.
- Stay Competitive – Some large companies may only work with suppliers who provide sustainability data.
Where to Start: Use a Gap Analysis
Most small businesses aren’t sure where to begin with sustainability. A gap analysis helps you figure out what you’re already doing and what needs improvement.
How to Conduct a Basic Gap Analysis for Sustainability:
- Step 1: List what you’re already doing – Do you recycle? Use renewable energy? Optimize deliveries?
- Step 2: Identify what’s missing – Are there wasteful areas? High energy costs? Inefficient processes?
- Step 3: Set realistic goals – Could you switch to energy-efficient lighting? Encourage customers to return packaging?
- Step 4: Track and document your progress – Data is key! Businesses that track sustainability win more clients and stand out.
Why Data Management Matters
Larger businesses want proof of sustainability. That means collecting, managing, and sharing data about what you’re doing.
- Keep records of energy use, waste reduction, or sustainable purchases
- Use simple tools (like spreadsheets or sustainability tracking platforms)
- Make reporting part of your business routine—so when big companies ask, you’re ready
Sustainability is an Opportunity!
Win contracts by providing sustainability reports to clients
Cut costs by using resources more efficiently
Attract customers who prefer responsible businesses
Create a better workplace where employees feel engaged in meaningful change
Don’t wait until big companies demand this, the more you do, the more valuable you become as a supplier!
Start now, track your sustainability efforts, and turn reporting into a competitive advantage!
Stay informed, make a difference!
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