Why 2024 is the right time for small and medium businesses to embrace carbon accounting

In a pivotal move toward environmental responsibility, the Australian Government announced its commitment to introducing climate reporting obligations for large corporations and financial institutions in 2023. Set to be phased in from July 2024, the Australian Sustainability Reporting Standards will initially target industry giants, yet their implications will cascade down supply chains, directly impacting smaller suppliers and mid-sized businesses.  

This article underscores why 2024 is the right time for medium-sized businesses to proactively adopt carbon emissions accounting, securing their position in an evolving marketplace driven by sustainability.  

The Ripple Effect: Scope 3 Reporting and the Supply Chain Impact: 

While small and medium-sized businesses might not find themselves directly affected by the Australian Sustainability Reporting Standards, the reverberations of these standards will undoubtedly resonate through their supply chains. Large corporations, designated as mandatory reporting entities, are mandated to report on the greenhouse gas emissions stemming from their entire supply chain—commonly known as Scope 3 reporting.  

If your business is in the supply chain of a much larger business - say a Coles, a CBA or even a BHP for example - then you should expect your largest customers to start asking questions about the carbon emissions that go into the production of whatever it is that you sell to them. 

And if you want to be able to satisfy those requests for information, carbon emissions accounting is the answer. 

ESG Metrics: The Currency of Supplier Preference: 

In 2024, accurate Environmental, Social, and Governance (ESG) metrics, with a particular focus on carbon emissions, will emerge as the currency of preference for corporate procurement teams. The ability to quantify the environmental footprint of production processes becomes a decisive factor in the selection of preferred suppliers. In a landscape where sustainability is a key differentiator, businesses that delay in adopting carbon accounting risk losing their coveted place in the supply chain hierarchy. 

Risk of Irrelevance: The High Cost of Delay: 

For medium-sized businesses, the choice is clear—embrace carbon emissions accounting now or risk irrelevance in the eyes of both corporate buyers and consumers. Those who fail to quantify and communicate their carbon impact risk losing out on opportunities, as discerning consumers and corporations pivot toward eco-conscious choices. Delaying this adoption not only jeopardises the business's standing but also opens the door to competitors who prioritise sustainability and transparency.  

The Competitive Edge: How Carbon Accounting Drives Innovation: 

Far from being merely a compliance task, carbon emissions accounting becomes a catalyst for innovation. Businesses that actively measure, manage, and reduce their carbon footprint position themselves as leaders in sustainability. Beyond securing their place in the supply chain, medium-sized enterprises gain a competitive edge, attracting environmentally-conscious customers and forward-thinking partners.  

Conclusion: 

In the ever-evolving landscape of corporate responsibility, 2024 emerges as a defining year for medium-sized businesses. The decision to adopt carbon emissions accounting is not merely about compliance; it's a strategic move to secure a place in the supply chain, meet customer expectations, and drive innovation. As sustainability becomes synonymous with success, the time for medium-sized businesses to embrace carbon accounting is now—the gateway to a greener, more sustainable future and a thriving role in the marketplace of tomorrow.