Is your business ready for Scope 3 reporting?

As Australia gears up for mandatory Scope 3 emissions reporting in 2025, businesses are facing a pivotal moment. These requirements will directly affect businesses across the country, including SMEs who will likely be asked to report their emissions as part of corporate supply chain measurement. 

Importantly, Scope 3 reporting is no longer just about regulatory compliance; it’s becoming a vital component of corporate risk management and sustainable business strategy.

Recently, industry experts from FootprintLab, Arup and Cogo came together on a webinar to help SMEs navigate this complex terrain. From practical tools to emerging trends, the session offered essential insights on how organisations can ready themselves in the Scope 3 space. 

Here’s a breakdown of the key takeaways and why they matter as businesses prepare for 2025…

1. Why Scope 3 matters: beyond Scope 1 and 2

Scope 3 emissions – those indirect emissions throughout your value chain – may seem like someone else’s problem, but they’re set to become everyone’s business come 2025. As FootprintLab's Janet Salem explained, reducing these emissions can also reduce risks tied to suppliers or sectors heavily impacted by carbon pricing. It’s not just about compliance; it’s about managing future financial exposures effectively and enabling collaboration on carbon management and reduction initiatives.

2. The Australian mandate: what’s happening January 1, 2025?

Emily Gentilini from Arup provided a useful “crash course” on the regulatory landscape. Starting January 2025, large companies under Australia’s financial reporting regulations will be required to include Scope 3 emissions, with gradual assurance level increases, from basic reporting to rigorous third-party verification by 2030. Key industries, especially those already under emissions scrutiny, must dive into their supply chain emissions.

3. SME impact: the “ripple effect” of large business requirements

While SMEs are not directly mandated to report Scope 3 emissions, they’ll still feel the impact. As Brian Johnston of Cogo noted, large companies now expect suppliers to disclose carbon data, making Scope 3 awareness critical even for smaller players. It’s rapidly becoming the “cost of entry” in procurement discussions with major clients.

4. Getting started: tools and tactics for Scope 3 beginners

Tim Baynes from FootprintLab recommended an initial “spend-based” data approach as a practical starting point for most businesses. His advice? Use tools that simplify emissions tracking by syncing with financial data, or look into affordable carbon accounting software to avoid the endless tangle of spreadsheets. For companies with large or complex operations, support from a consultant such as Arup for the first Scope 3 inventory can be a helpful way to explore, learn and plan for improvements all in one go. For companies without a budget for consultants, tech solutions like Cogo’s Carbon Manager offer a practical pathway.

5. Data quality matters: how deep should you go?

Data integrity is key to accurate reporting. As Tim Baynes explained, data exists at varying quality levels, from broad “readability” (spend-based data) to the more specific “microscope” detail of life cycle inventory. The right level depends on your business needs, but don’t underestimate the importance of quality – as Scope 3 data will be scrutinised in the future.

6. Benefits of early adoption: why move now?

Companies that are early adopters of Scope 3 reporting can gain a strategic advantage. Brian Johnston pointed out that having this data boosts credibility with investors, clients, and partners, signalling responsible risk management. For SMEs, having a ready emissions picture is becoming a mark of quality in the eyes of major clients.

7. A look ahead: trends shaping the future of carbon reporting

Expect a tech-driven shift, with increasing reliance on carbon accounting software. Brian noted that as complexity rises, most companies are moving beyond spreadsheets. Additionally, the demand for environmental product declarations (EPDs) is growing, and as Emily Gentilini highlighted, specific industry guidance will evolve. Looking five years out, Tim Baynes predicts that the transparency of Scope 3 data will spark a new wave of competitive sustainability, pushing companies to “walk the talk” on carbon reduction.

Embracing Scope 3 for strategic advantage

As the countdown to January 2025 continues, now is the time for businesses to take meaningful steps toward Scope 3 compliance. It’s not as hard as you think. There are modern tools and reliable data to help you get started immediately.Early adopters will not only stay ahead of the curve but set the standard for transparency, accountability, and innovation in Australia’s evolving business landscape.

P.S. Need a climate-themed movie or book recommendation?

Here was the round up of recommendations by panellists and participants:

• Downsizing. Explores the concept of degrowth in a literal way (shrinking ourselves), emphasising that if not enough of the world takes action, it won’t be enough. It uses comedy to tell the story, but not shying away from science (pivotal moment in the plot is when methane releases from permafrost are detected). 
• Dark Waters. Who doesn’t love a legal thriller, and who doesn’t love Mark Ruffalo? Put the two together and you have a great basis to tell the story of how strong both regulations and people power need to be to stand up to industrial pollution.
• Ministry for the Future. What might the future of climate governance look like? This is the book that solidified ‘Cli-Fi’ as an emerging genre in its own right. The opening chapter sets the scene with the lethality of climate change, with an agonising heatwave that kills millions, and triggers an inflection point in climate governance with the establishment of a global ‘ministry’ with unprecedented political power. 
• Lost in space (the new one). If Ministry for the Future wasn’t far enough in the future for you, try Lost in Space, where leaving Earth is the ultimate climate change adaptation strategy. 
• Migrations. A story set on the frontlines of climate change, in a ‘disappearing world’ in terms of wildlife and land, in the arctic. It has an immersive effect for readers, with the heartbreak of the plot line reinforced with the melancholy of seeing your world disappear. 
• Ahir Shah’s Netflix comedy special Ends. Need a pick me up? If you like british standup comedy, see if you can spot some great planet placement in Ahir Shah’s netflix special. 

I want a better catastrophe. Feeling confused after you’ve laughed and cried through the above? This book will mix “gallows humour and a broken heart (to) steer readers through their climate angst.”