With mandatory climate reporting in effect from 1 January 2025, getting ahead of emissions reporting is both a challenge and an opportunity.  

Australia's new climate disclosure laws require large businesses to disclose detailed climate-related information, fundamentally changing how organisations approach environmental transparency.

We recently hosted a virtual workshop called "Survive and Thrive" to help organisations understand these new requirements and prepare for what's ahead. The session brought together practical insights from our experts to help businesses navigate the complexities of climate reporting, unpack the most common compliance challenges, and offer practical strategies to keep compliance costs under control while turning regulatory requirements into competitive advantages.

Setting the Scene: Why This Matters Now

Australia's new climate reporting rules require large businesses to disclose comprehensive climate-related information starting in 2025. This includes reporting on Scope 1 (direct emissions from your business operations), Scope 2 (indirect emissions from energy use) and Scope 3 in year 2 (indirect emissions from supply chain).

Organisations will also need to report on governance practices, how they manage climate risks and their climate targets – aligned with the Australian Sustainability Reporting Standards (ASRS) and AASB S2. With strict deadlines and penalties for non-compliance, early preparation is crucial.

The legislation classifies organisations into three groups based on size and reporting obligations – an organisation must meet at least two out of the three specified criteria:

• Group 1: Entities with over $500m revenue, $1bn assets, or 500+ employees. Reporting from 1 January 2025.

• Group 2: Entities with over $200m revenue, $500m assets, or 250+ employees. Reporting from 1 July 2026.

• Group 3: Entities with over $50m revenue, $25m assets, or 100+ employees. Reporting from 1 July 2027.

While deadlines vary, most organisations are at different stages of readiness. The common thread? No one has it fully sorted yet.

For Group 1 companies, compliance is already mandatory and must be treated as a priority. For Groups 2 and 3 (and State Government agencies, currently exempt but expected to face future reporting requirements), the decision is whether to start now or wait.

What we found is that, although reporting isn't required immediately for all groups, starting early remains the most effective way to prepare for mandatory climate reporting.

‍The Reality of Climate Reporting: Six Common Challenges

‍“Many organisations face internal resistance – often due to low awareness and the perception that reporting is difficult or unnecessary.” Ben Daley, Co-Founder at Carbonhalo

Understanding these barriers is crucial for successful implementation. We discussed six common challenges that organisations consistently face:

1. Time: Reports must be submitted within three months of the financial year's end (reporting deadlines align with your organisation's financial year, regardless of the country). Early preparation is essential to avoid rushed, error-prone processes. ‍
2. Knowledge: Many organisations lack the specialist expertise to comply with the new standards (such as GHG Protocol or ISO 14064 standard), even if they're experienced with other regulatory reporting. ‍
3. Data: Sourcing accurate, consistent data from multiple systems and locations often leads to significant delays. Many organisations deal with thousands of data points scattered across various departments or geographic locations, making data collection time-consuming and prone to errors. ‍
4. Reporting: Creating compliant climate disclosure reports involves more than just emissions data – it requires addressing governance, strategy, and metrics. The new regulations are more demanding, and businesses often struggle to develop a detailed, compliant report using only internal resources. ‍
5. Help: Most organisations need external experts to guide them through the complexities of the climate reporting process. Few businesses have in-house staff with the right skills, which is why many companies turn to consultants, systems, or hybrid solutions. ‍
6. Risk: These five challenges ultimately converge into a major compliance risk, with penalties and reputational damage for businesses that fail to comply.

The scale of these challenges becomes clear when examining real-world examples:

“It took one client six months just to collect their business data. They were managing 40 entities and 50 sites, over 2,500 data points, and a number of administrators .” Richie Mulder, Co-Founder at Carbonhalo

When webinar attendees were asked about their biggest obstacles, time, data, and resourcing emerged as the top concerns – reinforcing the need for early planning, clear responsibilities, and external expertise.

A Framework for Compliance: Preparation and Work Streams

Despite the complexity, the process can be broken into manageable steps.

Firstly, in the preparation stage, leaders must appoint responsible owners and secure access to expert support. Responsibility can fall within legal, compliance, operations, or sustainability – and bringing in the right expertise (whether consultants, software, or a hybrid) is essential.

“Most large or complex organisations start with a hybrid or outsourced model. This allows them to manage their limited internal capacity and become comfortable with their data before transitioning to automation.” Ben Daley, Co-Founder at Carbonhalo

The compliance process can be structured around three key work streams:

• Stream 1: Measuring Emissions - Defining organisational and supply chain boundaries, collecting data, and calculating emissions. This can take 3-6 months. ‍
• Stream 2: Climate Disclosures - Reviewing gaps and preparing information on governance, strategy, risks and opportunities, and metrics. A new and complex area requiring a thorough gap assessment. This stream can take 4-6 months. ‍
• ‍Stream 3: Sustainability Reporting - Combining emissions data and disclosures into a comprehensive report aligned with financial statements. This phase takes 1-2 months.

From initial preparation through to final report submission, the entire climate reporting process typically takes 8 to 12 months, leaving little room for delay once the financial year ends.

‍From the virtual workshop:

Q: Who should be involved in a Disclosure Gap Analysis?

A: The answer is that input is needed from across operations, finance, legal, senior management, and emissions teams to ensure a complete, actionable analysis.

How to Manage Costs Strategically

To keep costs manageable and avoid budget blowouts, businesses should focus on strategic cost management rather than simple cost cutting:

1. Keep it simple: Focus on core requirements in year one. ‍
2. Start with Scope 1 and 2: Defer complex Scope 3 reporting if necessary.
3. ‍Use year one as a learning period: Don't aim for perfection immediately. ‍
4. Align internally: Ensure leadership shares a clear climate strategy and communications plan.
5. ‍Leverage what you have: Map existing operations and processes early. ‍
6. Start early, get multiple quotes: Avoid late procurement, where pricing can vary up to 5 times.

“One client discovered that 70% of their solar array wasn't functioning, prompting repairs that improved its efficiency. Another, after adjusting the material type of one of their products, cut emissions by 20% and saved over $2 million a year.” Richie Mulder, Co-Founder at Carbonhalo

The value of this strategic approach extends beyond cost control. Climate reporting often reveals unexpected operational insights.

These examples demonstrate how thorough emissions assessments can uncover operational improvements that generate returns far exceeding reporting costs.

Turning Compliance into Competitive Advantage

Mandatory climate reporting can be complex but is manageable with the right strategy. Early planning, expert guidance, and phased, practical steps can help organisations not only meet obligations but uncover efficiencies, reduce costs, and strengthen their market position.

Done well, climate reporting isn't just a compliance exercise – it's an opportunity to demonstrate leadership, engage staff, and meet rising customer and investor expectations. The organisations that approach this strategically will find themselves ahead of competitors who view climate reporting as merely a regulatory burden.

The most successful companies are those that recognise climate reporting as a diagnostic tool for operational excellence. The rigorous data collection and analysis required for compliance often reveals inefficiencies, cost-saving opportunities, and performance improvements that might otherwise remain hidden.

Furthermore, transparent climate reporting builds stakeholder trust in an era where environmental responsibility increasingly influences business success. Customers, investors, and employees gravitate toward organisations that demonstrate genuine commitment to sustainability, supported by credible, comprehensive reporting.

The Path Forward

The choice facing Australian organisations is clear: approach climate reporting as a minimum-viable compliance exercise, or embrace it as a catalyst for operational improvement and market leadership. The regulatory framework is already in place, and the deadlines are approaching rapidly.

For Group 1 companies, the time for preparation has passed – execution is now the priority. For Groups 2 and 3, the window for strategic preparation remains open, but it's closing quickly. The organisations making strategic investments in climate reporting capabilities today will be the ones setting industry standards tomorrow.

Success requires more than good intentions. It demands systematic preparation, expert guidance, and recognition that climate reporting represents both a compliance obligation and a competitive opportunity. The organisations that master this balance will emerge stronger, more efficient, and better positioned for long-term success.

If your organisation is navigating these challenges, we're here to help. Get in touch with the Carbonhalo team to explore how we can support your reporting journey and help transform compliance requirements into competitive advantages.

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