Australia has taken a significant step towards combating man-made climate change by passing a law to mandate climate-related reporting starting from January 2025. This new legislation will require large and medium-sized companies to disclose climate risks, opportunities, and greenhouse gas emissions, aligning with international standards set by the IFRS Foundation’s International Sustainability Standards Board (ISSB).
Key Highlights
Begins January 2025 for large companies
Phased approach for medium and smaller companies
Establishment of the Net Zero Economy Authority
More than 6,000 Australian businesses will be required to report in FY25
Thousands more businesses up and down the supply chain will be impacted
Who needs to report?
What information needs to be reported?
Climate-related risks: How are climate-related risks managed in the business, what governance is in place to manage these risks
Climate-related targets: What climate-related metrics and targets are in place
Business impacts: Impacts on business operations, strategy and financial planning
Greenhouse gas emissions reporting: Scope 1, 2 and 3.
Scope 1 emissions: Direct greenhouse gas emissions that occur from sources that are owned or controlled by an entity.
Scope 2 emissions: Indirect greenhouse gas emissions from the generation of purchased or acquired electricity, steam, heating, or: consumed by an entity. Purchased and acquired electricity of electricity that is purchased or otherwise brought into an entity's boundary. Scope 2 greenhouse gas emissions physically occur at the facility where their electricity is generated.
Scope 3 emissions: Indirect greenhouse gas emissions (not included in scope 2 greenhouse gas emissions) that occur in the value chain of an entity, including both the upstream and downstream emissions. Scope 3 and greenhouse gas emissions include the Scope 3 categories in the green else gas protocol corporate value chain (Scope 3) accounting and reporting standard (2011).
How is the new legislation likely to impact Australian farmers?
While it is unlikely that many Australian farmers will directly meet the thresholds for mandatory climate-related reporting, it is very important to consider how the upstream and downstream supply chains will be impacted of the businesses that do meet those thresholds.
Example 1: Coles and Woolworths will meet these thresholds and will be required to provide annual climate-related financial reports under the new legislation. Australian primary producers and growers whose products are sold at Coles or Woolworths will be indirectly, but still materially impacted and should expect to receive requests for information related to their farm’s sustainability practices and emissions.
Example 2: Some of Australia’s larger dairy processors may be directly impacted by the new legislation, causing them to put downstream pressure on their farmers for more sustainable farming practices and emissions reductions across the dairy supply chain.
Example 3: Woolworths recently announced they would only stock beef from primary producers that have not been linked to deforestation. Other major supermarkets are expected to follow with similar announcements, materially impacting many of Australia’s primary growers and producers.
What steps can Australian farmers take to prepare for the impacts of this new legislation?
Understanding your scope 1, 2 and 3 emissions
Understanding current emissions across the farm and operations will enable you to respond quickly to requests for information from your upstream and downstream suppliers. There are online tools available for farmers to do this themselves. If it is too complicated or you don’t have time you should consider engaging a consultant to do this for you. Your carbon footprint should consider emissions across scope 1, 2 and 3. Scope 1 refers to direct greenhouse gas emissions that occur from sources owned and controlled by the company i.e. methane from cattle, diesel used for tractors. Scope 2 refers to emissions from the production of purchased electricity i.e. heating, cooling, lights. Scope 3 refers to emissions up/down the value chain, as well as farming inputs such as fertilisers and herbicides.
Understanding climate-related risks for your farm
There are two groups of climate-related risks for you to consider across your farm and business – physical and transitional. Physical risks refer to direct and material effects of a changing climate on the agribusiness, land or assets. Examples include drought, bushfire, flooding, extreme weather events, heat-stress related animal conditions, increased prevalence of pests, and supply chain disruptions. Transitional risks refer to potential impacts to the farm, business or assets from the global decarbonisation / clean energy transition. Examples include increasing market pressures and demands, changes to import/export requirements, changes to carbon policies and regulations, mandatory climate reporting policies.
You may be asked by upstream and downstream suppliers for this information and having it on hand will enable you to respond quickly. Even if you aren’t asked to provide this information, it is incredibly valuable knowledge for you to have and will enable you to respond and recover from extreme weather variations or other climate-related impacts.
Developing your farms position on sustainability and climate
Requests for information from your upstream and downstream supply chains are likely to include sustainability practices across your farm, information on any climate resilience or adaptation strategies that have been implemented, or environmental initiatives that have been implemented across the farm etc.
If you already have the information on hand, you can take steps now to prepare it in a presentable way so that you can quickly respond to requests for information in the future. If you don’t yet have a position on sustainability and climate for your farm, you should consider taking steps now to develop one. You may also consider developing a high-level sustainability strategy for your farm that considers broad opportunities across soil, forestry, farm dams, protection of riparian zones, renewable energy and farm revenue diversification.
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About the Author
Carli Davis
Co-Founder & Chief Sustainability Officer, SEAOAK Consulting
+61 478 164 360
Carli is an experienced sustainability strategist with a background in regenerative agriculture. Carli’s work has spanned from farm to fork, including addressing the complex challenges and opportunities within waste prevention, regenerative agriculture, soil health, biodiversity, and more.
Key competencies and areas of interest
Regenerative agriculture
Organic farming
Hide / beef / cotton traceability
Sustainability reporting & carbon foot printing
Modern slavery & supply chain
Reconciliation action plans
Impact Investment & sustainable procurement
Circular Economy & lifecycle analysis
B Corp & other sustainability certifications
Regulation & compliance relating to agriculture
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