Your biggest customer now has to count your emissions

Mandatory climate reporting will never apply to most small businesses directly. That is not the same as it never reaching them.

Australia's mandatory climate reporting regime sits in Chapter 2M of the Corporations Act and works through the Australian Sustainability Reporting Standards, with AASB S2 the mandatory climate disclosure standard. Entities phase in by size. Group 1, the largest, began with reporting periods from 1 January 2025. Group 2 started for financial years commencing on or after 1 July 2026, which is now. Group 3 follows from 1 July 2027.

The Group 3 thresholds match the large proprietary company tests, which is why the regime stops short of genuine small business. The great majority of Australian small and medium firms will never lodge a sustainability report. The Australian Securities and Investments Commission says so plainly in its own guidance for small business.

What reaches them is Scope 3. A reporting entity must disclose emissions across its value chain, which includes the emissions of its suppliers, and the standards allow one year of relief before Scope 3 becomes mandatory. That relief has now run out for Group 1. The companies that began reporting in 2025 are building full value chain inventories through 2026, and Group 2 entities are doing the same work a year behind them. The practical consequence is a questionnaire arriving from a large customer, asking a small supplier for emissions data it has never calculated.

Canberra has noticed. The 2026-27 Budget proposed raising the financial thresholds for Group 3 proprietary companies, which would lift around 1,500 private entities out of the regime entirely, and flagged consultation on three operational issues: how the undue cost or effort test applies in practice, whether assurance settings are proportionate, and where the boundaries sit around supplier information requests. Small business is named explicitly in that last one as a group that should not face unreasonable data collection demands.

Until those boundaries exist, the request has no formal limit, and the leverage in the relationship is not evenly held. A supplier who cannot answer is not breaching anything. A supplier who cannot answer while a competitor can is in a different conversation entirely, particularly at tender.

Do the cheap version now and refuse the expensive one. Scope 1 and 2 for a small business is a weekend of work: fuel burned in vehicles and equipment, and electricity bought. Your energy retailer and fuel card statements hold most of it, and the Greenhouse Accounting Factors workbook converts the rest. Produce one page, date it, and send that page to every customer who asks rather than completing each one's bespoke spreadsheet. If a customer wants product-level or Scope 3 data from you, ask them to fund it or specify it in the contract, because that is a procurement requirement rather than a legal one. Within two years this becomes a tender question across construction, food and logistics, and the suppliers with a page ready will win work from the ones promising to look into it.