How to navigate Australia’s new climate regulations

This post was originally published on Sustainability Matters

Australia’s new climate reporting requirements are fast approaching, and for many businesses, the time to act is now. These rules demand more than just ticking boxes — they push organisations to think differently about their role in tackling climate change. Whether you’re just starting or refining your strategy, understanding how to navigate the Australian Sustainability Reporting Standards (ASRS) will be key to staying ahead.

Here’s how your business can prepare and make the most of these changes.

From compliance to opportunity

Initially, these standards might seem like a compliance headache. But think of it like preparing for a marathon. You wouldn’t wait until the last minute to start training. Similarly, aligning with these regulations requires a steady build-up, and the benefits extend far beyond simply meeting deadlines.

Enterprise Performance Management (EPM): beyond financials

EPM has traditionally focused on financial metrics, but that’s no longer enough. Today, sustainability, diversity and stakeholder engagement are equally important. For CFOs, this means embedding climate and ESG goals into strategic planning. Think of it as a new way to gauge your organisation’s health and resilience.

Rethinking risk management

Risk management traditionally focuses on immediate threats like market volatility or cyber risks. Climate risk adds a new dimension.

ERM must now incorporate climate risks and ESG factors, from carbon emissions to resource scarcity. Social and governance considerations, like diversity and ethical practices, also play a pivotal role.

Climate risks are not future problems — they’re already here. Embedding them into your risk assessments is crucial for resilience.

The carbon accounting shift

Reporting on Scope 1, 2 and 3 emissions is a central part of the ASRS. Relying on manual spreadsheets is like using a sundial in the digital age. Automated systems provide precise, financial-grade reporting, which not only ensures accuracy but also supports better decision-making.

This isn’t about tech for tech’s sake and automation is more than a buzzword here. It’s about making carbon accounting manageable and actionable.

Data foundations

Reliable climate reporting starts with solid data. But let’s face it, data is often messy.

Robust climate reporting hinges on data that is FAIR — findable, accessible, interoperable, and reusable. Imagine knowing not only your total emissions but being able to pinpoint the biggest contributors. This framework ensures data integrity and enhances transparency, enabling reliable financial and non-financial reporting.

Supply chain management

Managing the extended supply chain is now more critical than ever. Reducing Scope 3 emissions involves considering both upstream and downstream impacts. A holistic view of your supply chain will drive comprehensive carbon reduction and support broader sustainability objectives.

Five steps to get started

Preparing for the ASRS doesn’t have to be daunting. Here are five actionable steps to ensure your business is ready:

1. Assess gaps: identify where your business falls short of the new climate regulations. This will clarify the scope of necessary changes and help prioritise efforts.
2. Evaluate materiality: conduct a materiality assessment to pinpoint the most significant climate-related risks and opportunities for your business and stakeholders.
3. Review data and technology: examine your current systems. Leveraging existing technology while addressing gaps will streamline the transition and minimise disruptions.
4. Set a carbon baseline: establishing your carbon footprint is a vital first step in planning your decarbonisation strategy. It provides a benchmark for tracking progress and setting future goals.
5. Model climate scenarios: analyse potential risks and opportunities under different warming scenarios, such as 1.5 and 2.5°C, to guide strategic decision-making.
    

Preparing for the future

The ASRS is more than a regulatory requirement — it’s a chance to future-proof your business. By embedding sustainability into your operations now, you’ll not only meet compliance deadlines but also position your organisation for long-term success.

In the coming weeks, we’ll delve deeper into each of these steps, offering practical insights and strategies to help your business navigate this new landscape. Remember, this isn’t just about compliance. It’s about leading in a world where sustainability is non-negotiable.

Thierry Lotrian is CEO of Climate & Decisions, specialising in helping organisations navigate climate regulations through data and AI technologies.

Top image credit: iStock.com/VectorMine