With new climate reporting rules on the horizon, businesses across Australia are beginning to take a closer look at their emissions. Whether you’re a large company preparing for mandatory reporting, or a small business looking to stay competitive, understanding carbon accounting is now essential.

What is carbon accounting?

Carbon accounting is the process of measuring and tracking the greenhouse gas (GHG) emissions that a business generates through its operations. These emissions include carbon dioxide (CO2) as well as other gases like methane and nitrous oxide that contribute to climate change.

By accurately quantifying emissions, organisations can better understand their environmental impact, identify opportunities to reduce emissions, and support Australia’s broader climate goals.

Who will be affected by mandatory carbon accounting reporting?

From 1 January 2025, new climate disclosure laws will roll out through a phased approach. By 1 July 2027, many businesses will be required to report their emissions under mandatory carbon accounting regulations.

You may fall under the new rules if you meet one or more of the following categories:

Large businesses

Entities and their controlled entities that meet at least two of the following:

• Annual consolidated revenue of $50 million or more
• End-of-year consolidated gross assets of $25 million or more
• 100 or more employees

NGER reporters

Businesses already reporting under the National Greenhouse and Energy Reporting Act 2007 (NGER Act).

Large asset owners

Entities that are both:

• A registered scheme, registrable superannuation entity, or retail corporate collective investment vehicle (CCIV), and
• Have assets worth $5 billion or more at the end of the financial year (including controlled entities).

How is carbon measured?

Emissions are categorised into three “scopes” depending on how they are generated:

Scope 1: Direct emissions

These are emissions released directly from owned or controlled sources. Examples include:

• Fuel combustion from company-owned vehicles
• On-site manufacturing processes
• Company-operated generators or boilers

Scope 2: Indirect emissions from energy use

These emissions result from the generation of electricity, heating or cooling that your organisation purchases and consumes. While the emissions happen off-site (at the power plant), they’re attributed to your energy use.

Scope 3: Other indirect emissions

This scope includes emissions that occur across your value chain, outside your direct control. These can include:

• Purchased goods and services
• Business travel
• Employee commuting
• Waste disposal
• Transport and distribution

Scope 3 is often the most complex to calculate, but it also provides the biggest opportunity for change and impact.

Why does carbon accounting matter?

Carbon accounting isn’t just about compliance, it’s a valuable tool for improving your organisation’s environmental performance and reputation.

The benefits include:

• Meeting regulatory requirements and preparing for future legislation
• Improving operational efficiency by identifying carbon hotspots
• Responding to investor and customer expectations for transparency and sustainability
• Gaining a competitive edge, especially for small to medium businesses looking to partner with larger organisations that need to track Scope 3 emissions from their suppliers

How carbon accounting fits into broader sustainability reporting

Carbon accounting forms a key part of the broader sustainability reporting requirements being introduced in Australia.

From 2025, large companies will be required to disclose climate-related financial risks in line with international standards such as the ISSB’s IFRS S2, which the Australian Government is adopting through its mandatory climate-related financial disclosure framework. These reports will need to include detailed emissions data across Scope 1, 2 and, in many cases, Scope 3.

Robust carbon accounting ensures businesses can meet these new reporting obligations, provide credible emissions data to regulators and stakeholders, and demonstrate genuine progress towards net zero targets.

In short, carbon accounting is becoming a key part of doing business responsibly in a low-carbon future.

Want to learn more or get started?

Understanding your emissions is the first step. For more information about carbon and sustainability reporting see below links:

• Sustainability reporting – Australian Securities & Investments Commission
• Sustainability Reporting Standards – Australian Accounting Standards Board

Or try our free Carbon Calculator to get an idea of your own carbon footprint.