Carbon Reporting for Small Business

Last updated: April 2026

Why Should Small Businesses Report Carbon Emissions?

Even if your business falls below the mandatory AASB S2 thresholds, there are compelling reasons to start carbon reporting now:

• Supply chain requirements: Large companies reporting under AASB S2 need Scope 3 data from their suppliers — that means you. If you can't provide emissions data, they may choose a supplier who can
• Competitive advantage: Being able to demonstrate your carbon footprint differentiates you in tenders and procurement processes
• Cost savings: Measuring emissions often reveals energy waste. Many businesses save 5–15% on energy costs just by understanding where their consumption is
• Future-proofing: Group 3 thresholds start from July 2027 ($50M revenue, $25M assets, 100 employees). If you are growing, you may be caught sooner than expected
• Investor and lender expectations: Banks and investors increasingly factor ESG data into financing decisions

The 5-Step Process for Your First Carbon Report

Step 1: Set Your Organisational Boundary

Decide what is included in your carbon footprint. For most SMBs, this is straightforward — it is your company and any subsidiaries you control. The GHG Protocol offers two approaches:

• Operational control: Include entities where you have the ability to direct operating policies (most common for SMBs)
• Equity share: Include your proportional share of jointly controlled operations

If you operate from one or two offices with a vehicle fleet, operational control is the natural choice. Document your boundary choice — it needs to stay consistent year to year.

Step 2: Collect Your Activity Data

This is where most of the time goes. Here is exactly what to collect for each scope:

Step 3: Apply Emission Factors

Emission factors convert activity data (litres of diesel, kWh of electricity) into tonnes of CO2-equivalent. For Australian businesses:

• Primary source: NGA 2025 factors — published by the Australian Government for domestic fuels, electricity, and transport
• Supplementary: DEFRA 2025 (UK) for per-kilometre vehicle factors, international operations, and Scope 3 categories not covered by NGA
• Spend-based: For Scope 3 categories where you only have dollar amounts, use spend-based emission factors (e.g., kg CO2-e per dollar of IT services purchased)

The calculation is always the same formula:

Step 4: Generate Your Report

A carbon report should include:

• Organisational boundary and reporting period (typically 12 months aligned to your financial year)
• Methodology — which emission factor databases and GWP values you used
• Total emissions broken down by Scope 1, 2, and 3
• Emissions by source category (fleet, electricity, gas, travel, etc.)
• Year-over-year comparison (from your second report onwards)
• Any exclusions and the reason for excluding them

If you are reporting under AASB S2, the report also needs governance, strategy, risk management, and targets disclosures — see our AASB S2 compliance guide.

Step 5: Verify and Improve

Before finalising, sanity-check your numbers:

• Does the total feel reasonable? A typical Australian office produces roughly 5–10 tonnes CO2-e per employee per year (Scope 1 & 2 only)
• Are there any obvious gaps? Missing a facility or vehicle fleet is the most common error
• Have you used the correct year's emission factors? Factors change annually as the grid decarbonises

If external assurance is needed, engage your assurance provider before finalising — they may request specific documentation or methodology clarifications.

Common Mistakes to Avoid

• Using the wrong emission factors: NGA factors are updated annually. Using last year's factors or factors from the wrong country introduces material errors
• Forgetting refrigerants: A single large HVAC system leak can add 50+ tonnes CO2-e. Always check service records for refrigerant top-ups
• Missing facilities: If you operate from multiple sites (warehouses, retail locations), make sure every site is included in the boundary
• Double-counting electricity in Scope 1: Purchased electricity is Scope 2, not Scope 1. Scope 1 only includes fuel you combust on-site
• Ignoring Scope 3 entirely: Even if deferred under AASB S2, many stakeholders expect at least a preliminary estimate of your material Scope 3 categories
• No audit trail: If your report is just a final number in a slide deck, it cannot be assured. Keep source data, calculations, and factor references traceable

Realistic Timeline for Your First Report

With software, the calculation and report generation steps compress significantly. The data collection phase is always the bottleneck — start centralising your records now.

Spreadsheet vs Software: What Should You Use?

Frequently Asked Questions

Related Guides

• Scope 1, 2, and 3 Emissions Explained
• Australian Emission Factors Guide
• How to Comply with AASB S2 in Australia
• Preparing for a Carbon Report Audit