What is mandatory climate reporting?
From January 1 of 2025*, certain Australian businesses will be subject to mandatory climate reporting as part of their standard financial reporting. This reporting will include Scope 1, 2, and 3 emissions reporting, so even if you’re not one of the businesses who will have to submit your data, you may be a supplier to one of these businesses, and fall under the Scope 3 category.
This blog goes over what you need to know as a Scope 3 supplier, and help you prepare for what you may be asked to provide to your customers.
Related reading: How does ESG impact the logistics industry?
*Previously this was slated to be introduced in July 2024, and was pushed back to January 2025.
Which companies have to provide climate reporting?
This new reporting will roll out in three phases, and will be applicable to any companies that meet two out of three requirements:
- From January 2025, any company with over $500 million consolidated revenue, $1 billion or more consolidated assets, or over 500 employees
- From July 2026, any company with over $200 million consolidated revenue, $500 million or more consolidated assets, or over 250 employees
- From July 2027, any company with over $50 million consolidated revenue, $25 million or more consolidated assets, or over 100 employees
The reporting is mandatory for any company that meets the above requirements regardless of whether it is a public or private entity. Notably, small companies and charities are exempt from the reporting requirements.
There is still some debate about the exact timing of when this reporting will start and it has already been pushed back once, so keep an eye on it. But it never hurts to be prepared!
Take action:
Cross reference this list of requirements against your largest customers. Will any of them be required to submit this new mandatory reporting? Alternatively, do you work within the logistics team for an organization that will be required to report?
What do they have to report on?
The new reporting standards being introduced are based on the International Sustainability Standards Board (ISSB)’s climate standard, IFRS S2, with slight changes to the focus of the content of the report.
The key areas now being reported on are:
- Greenhouse gas emissions from Scopes 1 and 2, with a delayed roll out for Scope 3 reporting (being introduced around 2026)
- Climate related risks to the business strategy and model
- Opportunities and progress on climate-related targets, offset contributions, and transition plans
As Scopes 1, 2, and 3 are now becoming mandatory, many companies who previously considered Scope 3 too distant or difficult to measure, will be looking into it.
If my business comes under Scope 3, what will I be asked for?
If you’re supplying logistics to a customer who will have to report, the exact things you’ll be asked for is a little hazy at the moment since the reporting hasn’t started yet. There’s likely to also be some changes in the content and formatting of the reports over the first few years as the kinks get worked out.
However, we can assume that they’re likely to ask for data (such as number of shipments) to then calculate an emissions estimate, or ask if you directly track emissions and measure it against each customer.
One reassuring thing to note is that it’s unlikely that you’ll need to provide any interpretations of the data provided - that’s up to the reporting team.
Take action:
If you work for a company that will be required to report, start setting up emissions tracking. If you have customers who are likely to request this data from you, look into what you already track, and whether or not you can segment it by customer.
Data that’s helpful to track
Whether you’re directly measuring emissions data or not, there’s likely data you’ve already got tucked away somewhere that’s helpful for estimating emissions:
- Number of deliveries or stops
- Kilometers driven
- Number and type of vehicles in the fleet
- Fuel consumed
When will this data need to be ready?
If you have customers who (or work for a company that) fall into the required reporting group, you’ll need to ask them what their financial reporting cadence is.
The climate data will form a part of the standard finance reporting, which doesn’t happen on a standardized calendar. Some companies will follow the financial year, or the calendar year, or their own timeline. The best solution really is to ask.
Knowing if and when this will affect you will give you time to set up your tracking. The reporting does not cover historical data, so you’ll only need to measure from July of the year that you or your customer becomes eligible to report.
Adiona measures emissions data
Above: FlexOps Command displays CO2 measurements per vehicle
Using the Adiona FlexOps suite of tools, you’ll already be measuring your logistics data to either analyze yourself, or submit to your customer. With the baseline measurement from your first reporting period, use FleetSimulator to set emissions reduction targets you know you’ll actually achieve in your next reporting period.
Try it out for yourself, see our library of use cases, or sign up for a free two week trial.
