Carbon reporting is becoming increasingly important for Australian businesses. Simply put, carbon reporting is measuring and disclosing the greenhouse gases your business produces directly and indirectly. Understanding your carbon impact isn’t just good for the planet; it’s quickly becoming a necessity for doing business.
What Are Scope 1, 2, and 3 Emissions?
Carbon emissions from your business are grouped into three simple categories:
Scope 1 emissions
are the direct greenhouse gases released from sources your company owns or controls. This includes fuel burned by company vehicles, machinery, or on-site equipment used in daily operations.
Scope 2 emissions
are indirect emissions from the electricity, steam, heating, or cooling your business purchases and uses. These occur at the source of generation but are linked to your energy consumption.
Scope 3 emissions
are all other indirect emissions that happen across your value chain. This includes the carbon footprint of purchased goods and services, transport, business travel, waste, and how your products are used or disposed of.
Australia's New Carbon Reporting Requirements
Starting from January 2025, large Australian businesses must report their Scope 3 emissions annually under new rules set by the Corporations Act 2001. Initially, these rules target big companies, including property developers, banks, major retailers, and restaurant chains.
However, even if your business isn’t directly targeted, you’ll likely feel the effects if you supply these larger companies. They'll soon expect reliable carbon emissions data from you as part of their reporting obligations. Being proactive now gives your business a clear advantage in readiness and competitiveness.
Read more about these changes from Grant Thornton's detailed report here.
Special Focus on Construction and Buildings
In Australia, buildings contribute around 20% of our total carbon emissions. Much of this comes from what's called 'embodied carbon', meaning emissions from the materials used in construction and their transportation.
To tackle this, several new Australian regulations are emerging:
- NABERS Embodied Carbon Rating Non-residential buildings must now report embodied carbon emissions clearly.
- NSW Planning Policies (SEPP) New construction projects must demonstrate their sustainability credentials, including embodied carbon.
- National Construction Code (NCC 2025) Introducing voluntary embodied carbon reporting, moving towards mandatory standards by 2027.
For further reading, explore NABERS and NSW SEPP.
How Global Changes Affect Australian Businesses
Globally, carbon reporting rules are tightening:
- Europe’s Carbon Border Adjustment Mechanism (CBAM) will soon apply tariffs on high-carbon imports, including steel and cement. Australian exporters must provide verified carbon data to remain competitive in Europe. Learn more about CBAM here.
- The United States, United Kingdom, and several Asian countries increasingly require businesses to disclose carbon emissions clearly, affecting Australian businesses operating internationally.
- Voluntary global reporting standards, such as the Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP), encourage comprehensive carbon reporting, setting expectations even for Australian businesses not directly regulated.
These global developments mean Australian companies involved in international trade or supply chains must now have robust carbon reporting strategies in place.
Practical Steps to Prepare Your Business
Early action positions your business as responsible, compliant, and forward-thinking.
To get ready, follow these straightforward steps:
1.
Start measuring your carbon emissions now, tools like Rebuilt’s Product Carbon Footprint platform make this simple and affordable.
2.
Collaborate closely with suppliers to gather accurate carbon data.
3.
Use verified carbon data to build trust with customers, investors, and regulators.
Carbon reporting isn’t a distant future concern, it’s essential now. Businesses that proactively embrace these changes will find themselves ahead of the curve, well-prepared, and trusted by customers and partners alike. By understanding and managing your carbon footprint today, you're actively shaping a sustainable, successful tomorrow.