From January 2026, major corporations will include statements like the following in their strategy in their Assured Sustainability Reports:

“In order to achieve net-zero for its Scope 3 GHG emissions targets, the Group will need to work with its suppliers. The Group has an active program to work with suppliers to significantly reduce their GHG emissions. The Group is strengthening requirements for suppliers as part of our ambition to reduce climate impact and clear goals and targets are being agreed with suppliers. Alternative suppliers are identified and used if existing suppliers are unable to achieve their targets.”

If your business supplies or has ambitions to be a supplier to these major companies and other large companies who will have mandatory climate reporting requirements from 1 July 2027, you must consider the impact of their climate strategies on your business.

Before you can reduce your emissions, you need to be able to calculate them. Accurate measurement is one of the most effective ways to reduce emissions. Under the GHG Protocol, emissions can be calculated on an activity basis or a spend basis. The activity basis is more accurate, and emissions are generally lower than using the spend basis. However, specific data is required to calculate using the activity basis. Assess whether your organisation has the systems in place to capture the necessary data to calculate emissions.

Gaining a better understanding of your main sources of emissions might reveal some quick wins that also lead to cost savings and competitive advantages. For instance, switching to renewable energy or entering into power purchase agreements with a green energy provider might lower ongoing operational costs. Additionally, grants may be available to transition your fleet of business vehicles to electric hybrid vehicles, reducing both emissions and operating costs. Focusing on reducing fugitive emissions can also help cut costs, as excess fugitive emissions often indicate that a machine is not operating as designed. Early maintenance can improve the efficiency of the asset and reduce the need for capital expenditure.

If you decide to embark on a program of emission reductions, consider your organisation’s governance structure, strategy, and risk management process to identify existing gaps. Determine whether your business has an individual with the necessary skills and competencies to lead this initiative or if it would be more effective to outsource this function. Conducting a GAP analysis will help you identify climate-related risks and opportunities and leverage these opportunities effectively.

This article was first published in the Winter 2025 issue of HLB Mann Judd Perth’s Client Alert.