October 25, 2023
5
min read
Navigating Climate Risk Reporting for SMEs with 15Rock's Athena
SME's are starting to be drivers of climate progress. Read how.
In an era of increasing environmental concerns, businesses are under pressure to be transparent about their climate impacts. In response, mandatory climate risk disclosure rules are being implemented in Australia. Although small and medium-sized enterprises (SMEs) are currently exempt, they may find themselves indirectly affected by these new regulations, particularly concerning Scope 3 emissions.
The Implications of the Proposed Climate Risk Disclosure Rules for SMEs
The Australian government, spearheaded by the Australian Accounting Standards Board (AASB), is enacting new climate risk disclosure standards. These standards require companies to detail Scope 1 and 2 emissions from their own operations and energy usage, as well as Scope 3 emissions from suppliers, workers, and customers.
While larger businesses must comply from 2024-2025 and medium-sized enterprises from 2027-2028, SMEs may feel the ripple effects much sooner.
The Indirect Role of SMEs in Climate Risk Reporting
Although SMEs are currently exempt due to scalability and cost constraints, Scope 3 emissions requirements could draw them into the reporting system. Larger businesses may need climate-related data from smaller suppliers, which means SMEs might be asked to provide data such as meter readings, utility bills, or specific activity details.
It's crucial for SMEs to understand these rules to prepare for this shift, giving them a competitive advantage as they attract larger customers required to report their emissions.
Overcoming Challenges for SMEs in Climate Risk Reporting
The primary barriers for SMEs in these reporting schemes are cost and complexity. However, larger customers may introduce reporting as part of their procurement processes, banks may require it for lending, and governments are integrating climate considerations into tenders and grants.
To navigate this complex landscape, SMEs need to integrate carbon accounting into their standard business practices. Education and understanding of reporting requirements can help make this transition smoother.
Simplify Climate Risk Reporting with 15Rock's Athena
If you're an SME concerned about future climate risk reporting requirements, 15Rock's Athena can help. Athena uses AI to analyze climate-related data, providing comprehensive insights into your environmental impact.
With real-time monitoring, Athena delivers immediate insights and data-driven reports that detail your business's specific environmental activities. This transparency can help you maintain strong relationships with larger partners and prepare for potential future mandatory climate risk requirements.
Don't wait for the shift towards greener business practices to catch you off guard. Start preparing today with 15Rock's Athena and steer your SME towards sustainable growth and transparency. o learn more about how Athena can help your business adapt to new climate risk reporting standards.
