As climate change continues to reshape industries globally, Australian farmers are facing growing pressure to measure and understand their carbon emissions. New mandatory climate reporting rules are coming into play, changing how businesses operate and interact with domestic and international markets. As more companies are required to share their climate risks, big businesses will start asking their suppliers – including farmers – for emissions data and sustainability efforts. Staying informed about these changes is crucial to remain competitive and adapt to the evolving regulatory and market landscape.
It’s important to remember that, while any major transition brings challenges, it also presents great opportunities for those who are proactive and prepared. Here’s an overview of what these changes entail and why understanding your farm’s emissions is crucial.

Understanding the New Legislation
In September 2024, the Australian government introduced some key changes to the Corporations Act, establishing a mandatory framework for climate-related financial disclosures. Essentially, many large businesses and financial institutions, including those in the agricultural supply chain, will have to report their greenhouse gas emissions and climate risks from next year.

Focusing on GHG emissions, this will start with the reporting of their Scope 1-2 emissions (emissions created directly by the business) and later, on Scope 3 emissions (indirect emissions arising from the business’s value chain).

Who is required to report?

• The new rules will affect businesses that meet certain criteria around revenue, gross assets, or number of employees. This impacts all sectors, including agriculture.
• Many of these impacted businesses sit within the agricultural supply chain and interface directly with farming businesses; think banks, insurance companies, major retailers and processers, to name a few.

Why has this been introduced?

• Climate reporting ensures transparency about emissions and climate risks.
• By making this a legal requirement, the government is increasing accountability and helping investors, the public, and governments understand the environmental impact of various industries.
• This brings Australia into alignment with many of its major export partners who have already implemented, or are in the process of implementing, similar measures.

When does this start?

• Rollout will be phased, with the different size thresholds determining who will be required to report, and when.
• Group 1 businesses must start reporting on their scope 1 and 2 emissions from January 2025 (just under two months away) and their Scope 3 emissions from 2026.

How does this impact farming businesses?

• Farming businesses contribute to the Scope 3 emissions of many large companies.
• For some of these companies, such as banks and retailers, Scope 3 emissions make up most of their carbon footprint and will no doubt be where they target reductions. These big businesses cannot hope to meet their obligations around Scope 3 emissions without the support of their suppliers and clients.
• This means that farmers will inevitably become part of the reporting process as their banks, insurance companies and buyers seek farm emissions data to meet their reporting obligations.

Why Farmers Need to Start Carbon Accounting
It’s no longer just a “nice-to-have” to know your emissions – this will become business as usual, alongside your annual production and financial reporting. Understanding your emissions today will set you up for success in the near future:

1. Compliance is coming
Even if your farm isn’t directly required to report emissions yet, your business will inevitably be part of the reporting process. Do you collect the necessary data and have the record-keeping systems in place? Getting prepared now ensures you won’t be scrambling later.

2. You can’t manage what you don’t measure
To make any decisions around emissions in your business, you must first understand and measure those emissions. Setting up a system to measure emissions might take some time, but this is a critical step for managing risk and improving both productivity and sustainability. More data means better decisions. It’s just good business.

3. Unlock new revenue streams and operational efficiencies
Carbon accounting can provide you with information to make decisions around carbon farming – such as tree planting or soil carbon projects – and how you want to handle the generated ACCUs. For example, do you want to generate a new revenue stream, do you want to retain the ACCUs to inset against your farm emissions, or perhaps a mix of both.

By understanding your emissions, you can also identify opportunities to reduce emissions while also improving efficiencies. Practices like optimising fertiliser use through VRT or altering livestock management can lower costs, improve yields and reduce environmental impact.

4. The power of a story: building a stronger market position
With sustainability becoming a priority for domestic and international consumers, supply chains, and investors alike, the ability to demonstrate environmental stewardship is increasingly valuable. By tracking and managing your emissions, you can tell a compelling story that can strengthen your market access and even open new doors to the rapidly growing premium markets that value sustainability.

Overcoming Barriers to Carbon Accounting
It’s understandable that the idea of measuring and reporting emissions may feel daunting. Many farmers face similar challenges, such as:

• It sounds complicated and confusing.
• You don’t know where to start.
• It’s just one more thing that you don’t have the bandwidth to deal with right now.

These concerns are valid. However, those who take a proactive approach will be better equipped to manage emissions and take advantage of opportunities when they arise. By starting now, you’re ensuring that you’re in control, rather than reacting to supply chain demands when they come.

And the best part? You don’t have to navigate this on your own. Planfarm TerraWise can help you set up systems for carbon accounting, making it a seamless part of your regular business reporting. If you’re an existing Planfarm client, we already have most of your records and understand your business, making this even smoother. We can tailor a solution that’s right for you, ensuring you’re ready for this next transition in farming.