Do Small Businesses Need to Report Carbon Emissions in Australia?

Here's a scenario playing out across Australia right now. A 60-person engineering firm in Brisbane loses a tender. Not on price. Not on capability. The head contractor — a Group 1 ASRS reporter — needs Scope 3 supplier emissions data for their annual climate disclosure. The firm can't provide it. The contract goes to someone who can.

No mandatory reporting obligation. Not under NGER. Not under ASRS. But it costs them the contract anyway.

That's the reality of small business carbon emissions reporting in Australia right now. The law says you probably don't have to report. The market is starting to say otherwise.

We talk to businesses like this every week at Carbonly. They're confused — and honestly, they should be. The regulatory framework is designed around large entities, and the guidance for smaller companies is thin. So here's what we actually know, what's coming, and what you should do about it.

Right Now, Most Small Businesses Are Exempt

If you have fewer than 100 employees and under $50 million in revenue, you almost certainly don't have a direct mandatory reporting obligation. Full stop.

Here's why. Australia's two main carbon reporting regimes — NGER and ASRS — both set their thresholds well above typical small business scale.

NGER (National Greenhouse and Energy Reporting) requires reporting if your corporate group emits 50,000 tonnes of CO2-e or consumes 200 terajoules of energy annually. For context, a typical office-based business with 50 employees might emit 200–400 tonnes per year. You'd need to be running heavy manufacturing, mining, or large-scale logistics to get anywhere near the NGER thresholds. Only 961 controlling corporations were on the NGER register for the 2023–24 reporting year. If you're not sure whether your company crosses the NGER thresholds, you probably don't.

ASRS (Australian Sustainability Reporting Standards) uses a phased rollout based on entity size. Group 1 — the biggest companies, $500M+ revenue — started reporting in January 2025. Group 2 entities ($200M+ revenue, 250+ employees) start in July 2026. These are not small business thresholds by any definition.

So if you're a 30-person consultancy, a local construction subcontractor, or a retail business turning over $8 million a year — no, you don't have to report. Breathe.

But don't get too comfortable.

ASRS Group 3 Arrives July 2027 — and the Bar Drops Significantly

Group 3 is where things get interesting for businesses that think of themselves as "small" but aren't, technically, under the Corporations Act.

The thresholds for Group 3 match the definition of a "large proprietary company" under section 45A of the Corporations Act. You're captured if you meet two of three criteria:

Consolidated revenue of $50 million or more
Consolidated gross assets of $25 million or more
100 or more employees at end of financial year

That's not BHP. That's a mid-sized construction firm. A regional logistics company. A group of medical practices that have consolidated under one holding entity. ASIC estimates that approximately 6,000 additional entities will be captured by the full ASRS rollout — and a large chunk of those are Group 3.

Here's the bit that catches people out: it's "two of three," and assets is the easiest to trip. A business turning over $35 million with a warehouse, a fleet of trucks, and some equipment could easily have $25 million in gross assets. Add 100 employees across a few sites and you're in — even though you probably don't think of yourself as a "large" company.

And Group 3 isn't a watered-down version of the standard. You still need to comply with AASB S2. You still need to disclose climate-related risks and opportunities. You still need your Scope 1 and 2 emissions measured and reported, with limited assurance from year one. Directors are still personally liable for the accuracy of those numbers. The maximum penalties — $15 million or 10% of annual turnover — apply equally.

The one concession: if you genuinely have no material climate-related financial risks or opportunities, you can include a statement explaining that conclusion instead of full disclosure. But you still need to go through the assessment process. And that assessment itself needs to be defensible, because ASIC will be watching. Their Regulatory Guide 280, released in March 2025, makes clear that "no material risk" conclusions will face scrutiny.

We're not entirely sure how many businesses currently sitting in the 80–120 employee range realise they'll be in scope. Our guess? Not many.

The Reporting Obligation That Doesn't Come From Regulators

Here's where the real pressure is for genuinely small businesses — the ones well below any ASRS threshold.

It's not coming from the Clean Energy Regulator or ASIC. It's coming from your customers, your bank, and the government agencies you tender for.

Your largest customers need your emissions data. Every Group 1 and Group 2 ASRS reporter must disclose Scope 3 emissions from their second reporting period onward. Scope 3 includes everything in their value chain — which means you, their supplier. When Woolworths, BHP, or Lendlease prepares their climate disclosure, they need emissions data from every significant supplier in their network. That data request is already flowing downstream.

We've seen it firsthand. Large retailers started requesting emissions data from suppliers in 2025, ahead of their Group 1 Scope 3 reporting deadlines. Construction head contractors are putting carbon reporting requirements into subcontractor prequalification questionnaires. Mining companies are adding emissions disclosure to their procurement processes.

If you can't provide actual emissions data, the large entity will estimate it for you — using industry averages that almost certainly overstate your actual footprint. That makes them look worse in their disclosure, and makes you look like a supplier who isn't keeping up. Neither outcome is good.

Banks are paying attention too. APRA's CPG 229 guidance requires banks, insurers, and super funds to manage climate-related financial risks across their portfolios. That includes the emissions profile of businesses they lend to. The Australian Sustainable Finance Institute (ASFI) released Version 1 of the Australian Sustainable Finance Taxonomy in June 2025, and major banks — including CBA — are piloting it. NAB has committed to $80 billion in environmental financing by 2030 and explicitly integrates ESG risk into lending decisions.

What does this mean for a small business applying for a loan? Today, probably nothing changes for a standard business loan. But we're seeing early signals that green business lending products — with better rates — require some form of emissions baseline. And within two to three years, it's reasonable to expect that larger commercial loans will come with ESG questionnaires as standard. Banks need to quantify the emissions in their lending portfolio. Your business is part of that portfolio.

Government procurement is the third pressure point. The Commonwealth's Environmentally Sustainable Procurement (ESP) Policy already applies to construction services procurements above $7.5 million (from July 2024) and to ICT, furniture, and textiles above $1 million (from July 2025). If you're tendering for government work — even as a subcontractor — you may need to complete a Supplier Environmental Sustainability Plan (SESP) that includes your approach to emissions measurement and reduction.

State governments are moving the same direction. Several states have their own sustainable procurement frameworks, and the direction of travel is clear: carbon data is becoming a procurement criterion alongside price and quality.

The Cost of Doing Nothing vs. Starting Now

Let's be honest about what "getting ahead of it" actually means for a small business.

We're not talking about spending $200,000 on consultants and assurance. That's a Group 1 problem. For a small business with 20–80 employees and a few sites, measuring your carbon footprint is not the enormous undertaking people assume.

Most small businesses have a simple emissions profile. Your Scope 1 is gas bills and company vehicles. Your Scope 2 is electricity bills. That's it. For a business running three office or warehouse locations in, say, Sydney, your annual Scope 2 emissions from electricity alone would be roughly:

Three sites x 150,000 kWh average x 0.64 kg CO2-e per kWh (NSW grid factor from the NGA Factors 2025) = about 288 tonnes CO2-e.

That took us ten seconds to calculate. Getting precise numbers from your actual utility bills takes longer — but with the right tools, not that much longer.

The cost of not having this data is harder to quantify but very real. Lost tenders. Higher loan rates as green financing becomes standard. Scrambling to build a baseline from scratch when a major customer sends a Scope 3 data request with a two-week deadline. And if you do fall into Group 3 in 2027, starting your emissions measurement in 2027 means your first disclosure has no comparison year. You're already behind.

Starting now — even with rough numbers — gives you a baseline. A baseline gives you a trend. A trend gives you a story to tell customers, banks, and (if it comes to it) regulators. You don't need perfection. You need a defensible starting point.

What "Starting" Actually Looks Like

For a small business, carbon accounting doesn't need to be complicated. Here's what matters.

Collect twelve months of electricity bills, gas bills, and fuel receipts. That covers the vast majority of your Scope 1 and Scope 2 emissions. If you have company vehicles, get fuel card statements or odometer logs. If you operate from leased premises, check whether your landlord provides energy data — many commercial leases include utility summaries.

Apply the correct emission factors. In Australia, these come from the NGA Factors workbook published annually by DCCEEW. The grid emission factor varies by state — Victoria at 0.78 kg CO2-e/kWh is more than triple Tasmania's 0.20, so where you operate matters a lot.

Record your methodology. This sounds bureaucratic, but it's the difference between a number you can defend and a number you can't. Write down which emission factors you used, what data sources you pulled from, and any assumptions you made (like estimating gas consumption for a site where the landlord pays the bill). If you ever need to provide this data to an auditor, a customer, or a regulator — that paper trail is everything.

And if you don't want to do any of that manually — well, that's why we built Carbonly. We pull consumption data directly from utility bills using AI, apply the right NGA emission factors automatically, and generate an audit trail without anyone touching a spreadsheet. But honestly, even a well-organised spreadsheet is better than nothing for a business just getting started. We've written about when spreadsheets still work and when they don't.

The Honest Answer

Do you need to report carbon emissions as a small business in Australia today? Legally, almost certainly no.

Will you need to in the next two years? If you meet two of the Group 3 thresholds ($50M revenue, $25M assets, 100 employees), yes — from July 2027.

Even if you're well below those thresholds, is the market going to make it effectively mandatory? That's where we'd put our money. Every major customer reporting under ASRS needs your emissions data. Banks need it. Government procurement processes are starting to require it. The direction of travel is one-way.

The businesses that are going to be caught flat-footed aren't the ones with 500 employees and dedicated sustainability teams. It's the ones with 40–100 employees who assume this doesn't apply to them — right up until they get a Scope 3 data request they can't answer, a tender they can't win, or a regulatory threshold they didn't see coming.

Start measuring. Even if nobody's asking yet. Because by the time they ask, you want to have the answer ready.