The Australian Senate has recently passed landmark legislation, introducing a mandatory climate-related financial disclosure framework effective from early 2025, with larger corporations leading the way and smaller entities following suit in subsequent years.
While seemingly a modest requirement, the mandate demands that companies submit a sustainability report under the Companies Act if they meet specific thresholds, such as an annual income of $50 million or more, assets valued at over $25 million, and a workforce exceeding 100 employees. The phased implementation of reporting requirements is likely to necessitate firms at this stage to submit reports as of July 2027. If you possess $500 million in income or a staggering $1 billion in assets, then the starting point for your financial endeavors would be January of the subsequent year.
Revisions to the legislation entail assessments of current circumstances, including disclosures on temperature deviations exceeding target thresholds, with a primary objective of maintaining a global warming increase of no more than 1.5°C above pre-industrial levels.
As a result of regulatory requirements compel companies to assess the mandated scenarios, they must navigate unpredictable local weather risks and impairments, exposing potential hazards that threaten their enterprise’s stability. The revised text is: The laws also comprise scope 3 emissions reporting, which encompasses greenhouse gas emissions arising from assets not owned or controlled by the reporting entity, but rather connected to its value chain.
To better understand the unfolding scenario and capitalize on opportunities for local weather tech startups, we sought insights from three experts. Right here’s what they mentioned.
Anthony Wilmont
Cofounder and CEO, DAS
As the landmark laws head to Parliament, it’s astounding to think that geospatial expertise can significantly contribute to monitoring emissions data for various organizations, especially in the finance and agriculture sectors. Until major financial institutions, leading supermarkets, and exporters start demanding this data from their rural partners, it won’t be a priority; without the right tools in place, tracking will be challenging.
Startups seeking regulatory clarity are finding themselves in need of innovative solutions that streamline compliance and governance processes. Some of our most significant and long-lasting partnerships have emerged as a direct result of innovative regulations.
Companies in the finance sector, like those at DAS, have a track record of adapting quickly to newly enacted regulations. To stay ahead of regulatory requirements, where possible – a key motivation behind our ISO accreditation, enabling us to collaborate with financial institutions such as banks and insurance companies at an earlier stage if needed.
While some startups might initially view compliance with new regulations as an obstacle, it’s crucial they start preparing now – regardless of the 2027 deadline for smaller firms.
Firms of all sizes are often challenged to ensure that their suppliers meet specific requirements, particularly in terms of data and documentation. To address this need, it is crucial that they clearly articulate their expectations upfront. To enable effective collaboration, this process should take place promptly to allow startups sufficient time to support larger corporations in establishing a solid foundation before the reporting deadline, ensuring seamless communication throughout the supply chain.
Adam Milgrom
Companion, Large Leap
Large Leap companion Adam Milgrom
This legislation represents a significant turning point for Australian organizations, requiring them to fundamentally reassess their carbon footprint and implement more advanced strategies for emission reduction.
Larger organizations have established frameworks that enable them to track a wide range of metrics across their entire organization. With the advent of this new coverage, some of the responsibility will be transferred to providers’ supply chains, which may struggle to comprehend the necessity of having such information readily available.
To achieve success, novel procedures and pioneering approaches will need to be implemented seamlessly.
All businesses, regardless of size, require seeking guidance from experts. Specialist experts, such as Hint, are uniquely positioned to help organizations successfully execute their goals and objectives.
Cat Lengthy
Cofounder & CEO, Hint
Catherine Lengthy, co-founder of Hint
By the end of 2024, emissions reporting will be implemented across three teams, contingent on companies’ online assets, revenue, and full-time employees, with a phased rollout expected to conclude by 2027.
Starting in July 2027, companies with a workforce of at least 100 employees and annual revenues exceeding $50 million will likely need to publicly report on their climate-related risks and greenhouse gas emissions.
Firms have been granted a one-year reprieve for Scope 3 emissions reporting, while regulatory accountability has been curtailed, prompting concerns that the revised standards are overly lenient.
Despite this, I believe it’s a massive and crucial change in reporting requirements, especially for smaller companies in the third group, which comprise many organizations that do not publicly disclose their financial performance, let alone their climate-related risks and opportunities.
While many startups and emerging companies may struggle to reach Group 3 threshold targets by 2027, their operations will nonetheless be influenced by the subsequent implications.
As widespread adoption of Scope 3 emissions reporting unfolds, companies impacted will likely demand that their supply chain partners disclose and manage their respective greenhouse gas emissions. Despite the common assumption that direct emissions account for a significant portion of an organisation’s carbon footprint, in reality, Scope 3 often represents more than 70 percent of this total. It is therefore unrealistic for companies to achieve meaningful decarbonisation without engaging their supply chains.
Measuring carbon emissions doesn’t have to be a daunting task, especially for smaller businesses.
At Hint, we pride ourselves on empowering small-to-medium-sized enterprises (SMEs) to confidently quantify, manage, and report their greenhouse gas emissions by harnessing available data and credible sources.
To avoid last-minute scrambles, it’s advisable to begin calculating your carbon footprint and assessing climate risks well ahead of schedule.
