What Australian businesses need to know about timing, scope, and how to get ready.
Australia is moving from optional climate reporting to full accountability. Under new climate-related financial disclosure rules, many organisations will be required to report Scope 3 emissions (indirect value-chain emissions) alongside Scope 1 and Scope 2. This is a significant shift for corporate climate responsibility and supply-chain transparency.
What Are Scope 3 Emissions — and Why They Matter
Scope 3 emissions are the indirect greenhouse gas emissions that occur across a company’s value chain, both upstream and downstream. Typical categories include purchased goods and services, transportation and distribution, business travel and commuting, waste, use of sold products, investments, and more.
For many sectors, Scope 3 is the largest share of total emissions. Measuring and disclosing these emissions provides visibility into supply-chain risks, transition exposure, and decarbonisation opportunities.
The New Legal & Reporting Landscape
Mandatory Climate Disclosures Commence
Mandatory climate-related financial disclosures, aligned to Australia’s sustainability reporting standards, apply to in-scope entities for reporting periods beginning on or after 1 January 2025. For June year-end reporters, this typically means the first disclosures appear in the FY2026 annual report.
Who Must Report?
Obligations apply to reporting entities under the Corporations Act that meet size and other thresholds, phased in by groups (largest first). Asset owners (e.g., certain schemes and super funds) are also captured. Smaller entities outside the thresholds may still feel indirect pressure through procurement and financing.
Scope 3 Timing & Transition
Most entities will start with Scope 1 and Scope 2, with Scope 3 required from the second reporting period (transitional relief applies in year one). Assurance requirements are phased and move toward reasonable assurance in later years. Early planning is essential.
What Scope 3 Disclosures Should Cover
- Materiality & categories: Identify which of the 15 value-chain categories (GHG Protocol) are relevant and material; explain any exclusions.
- Methods & assumptions: Document calculation approaches (spend-, activity-, hybrid), emission factors, data sources, and uncertainty.
- Integration: Link Scope 3 data to governance, strategy, risk management, targets, transition plans, and scenario analysis.
- Metrics & targets: Disclose absolute and intensity metrics where applicable, plus progress against targets.
- Assurance readiness: Build controls, audit trails, and documentation to support phased assurance.
Common Challenges & Risks
- Data gaps: Limited supplier/customer emissions data; need for proxies and defensible estimates.
- Boundary decisions: Selecting relevant categories and justifying exclusions.
- Consistency: Maintaining methods over time for comparability and trend analysis.
- Governance & controls: Embedding ownership, review processes, and internal controls.
- Legal exposure: Managing disclosure risk while using transitional liability relief appropriately.
Your Roadmap to Readiness
- Confirm applicability: Assess whether your entity is in scope and when.
- Set governance: Assign board/executive accountability; form a cross-functional working group.
- Gap analysis: Compare current practices to new disclosure requirements with a Scope 3 focus.
- Map the value chain: Prioritise material Scope 3 categories and high-impact suppliers/customers.
- Engage suppliers: Begin data requests; embed emissions clauses into contracts and onboarding.
- Choose methods: Select calculation approaches; document assumptions and uncertainty.
- Pilot & refine: Run a dry-run of Scope 3 numbers; stress-test controls and evidence trails.
- Plan assurance: Prepare for phased limited assurance, moving toward reasonable assurance.
- Align strategy: Use insights to inform targets, transition plans, procurement, and product strategy.
- Monitor updates: Track guidance from AASB/ASIC/AUASB and refine your approach.
Beyond Compliance: The Opportunity
Done well, Scope 3 reporting unlocks strategic value. It surfaces cost and risk hotspots, informs supplier collaboration, strengthens investor confidence, and differentiates your brand in tenders and procurement. Early movers build better data, better relationships, and better outcomes.
How Emission Statement Can Help
Emission Statement makes Scope 3 practical. We provide:
- Scope 3 readiness assessments and gap analyses
- Supplier engagement toolkits and data collection workflows
- Methodology design (spend-, activity-, and hybrid models) and documentation
- Controls & evidence frameworks for assurance readiness
- Dashboards & reporting aligned to Australian standards and the GHG Protocol
Talk to us about a fast, phased plan that gets you Scope 3-ready ahead of your first disclosure deadline.
Disclaimer: This article provides general information only and does not constitute legal or financial advice. Organisations should seek professional advice tailored to their circumstances.
Emission Statement 
Leave a comment