Moving Goal Posts with ESG and Carbon Reporting

Over the past few weeks, I have spoken to several people who are interested in ESG and each conversation turned to uncertainty about what is required for ESG (Environmental, Social and Governance) reporting. Carbon reporting is the E in ESG.

We have legislation currently before the Federal Parliament which mandates large corporations to report on ESG. The legislation provides guidance on their requirements but I suspect that like most legislation there will still be grey areas where it isn’t clear exactly what is required.

We have the International GHG (Greenhouse Gas) Protocol which is detailed and specific in how carbon emissions are to be calculated. But does the Australian legislation require the use of these Protocols? Then we have accounting standards which will dictate the reporting requirements.

So, yes, there are different pieces of the jigsaw puzzle that we need to put together to see the full picture. And right now, a few pieces of the puzzle are missing.

But what about SMEs? They aren’t directly involved in the current legislation, but they are indirectly. You see, for the large corporations to comply with their requirements, they will need the carbon emissions data from their suppliers.

For the suppliers to calculate their carbon emissions, they need the information from their suppliers. The cascade continues until it could potentially impact the very smallest of businesses.

That is unless there is another raft of legislation which sets out the ESG requirements for SMEs (or those not covered by the existing legislation aimed at large corporations). We can only hope that common sense prevails and whilst ESG is good business, the requirements for SMEs are not as onerous as those for large corporations. 

The challenge today is what to do. 

Do you wait until legislation requires you to act? 

Do you wait until your customer(s) require you to provide the data?

Do you take action now and undertake a carbon emissions footprint assessment so that you know what your starting point is?

I recommend taking action now to get a carbon footprint assessment report. This report will provide you with a baseline to benchmark your future emissions. It will also give you insights into the key areas to focus on within your business to reduce emissions so that when you are required to provide your data to customers or as a reporting requirement, you will already have reduced your footprint.

We are proud to advise that this article was written by the team and not produced by AI.