Carbon Accounting & ESG Reporting – an evolving priority for your organisation

Posted on July 10th, 2024 by WLF
Carbon Accounting and ESG Reporting

In May 2024 we hosted 100 clients for our annual Assurance and Financial Reporting Update seminar, where we brought together an array of experts to share their expertise and insights on the rapidly emerging areas of environment, social and governance reporting (ESG), carbon accounting and climate-related disclosures.

These areas have been on our radar at WLF for some years, and we have been closely following the developments on ESG reporting in particular, at an international and national level. Over the past year since we shared our first ESG reporting article on our website we have seen significant updates, including proposed new accounting standards, and a Treasury Bill going through Federal Parliament.

The presentations and panel discussion at our event in May were both informative and engaging, and we know this has sparked some ongoing discussion in organisations as well as internally for our own team. So, it feels timely to do a further article to share the latest updates and developments with our valued clients and contacts. 



Environmental, Social and Governance (ESG) has led to increased reporting requirements around organisations impact on the environment and to society. The development of a proposed new accounting standard and the Treasury Bill mark changes that will see many organisations, who meet relevant thresholds, become accountable for their emissions usage. These changes may also impact small to medium businesses who would be captured through scope 3 emission reporting.



The international Sustainability Standards Board (ISSB) Introduced two new standards ISSB S1 General requirements for disclosure of sustainability-related financial information and ISSB S2 Climate-related disclosures in June 2023, attempting to standardise global sustainability reporting. These standards will capture:

  • ISSB S1 – Sets out the general requirements for a complete set of sustainability related financial disclosures, adopting a four-pillar core content framework which requires an entity to provide disclosures around: Governance, strategy, risk management, and metrics and targets.
  • ISSB S2 – The Climate Standard which will address climate-related disclosures, including detailed information on an entity’s greenhouse gas (GHG) emission, climate risk and opportunities.

On 24 April 2024, ISSB announced they would begin developing S3 Biodiversity, ecosystems and ecosystem services (BEES) and S4 Human Capital. The two new standards will be developed from pre-existing initiatives, Sustainability Accounting Standards Board (SASB) and Climate Disclosure Standards Board (CDSB) guidance as well as the relevant aspects from the Taskforce on Nature-related Financial Disclosures (TNFD).



On 27 March 2024 the Treasury Laws Amendment Bill 2024 was released, and schedule 4 introduces a proposed new mandatory climate-related financial disclosure regime. These Australian reporting requirements are expected to come into effect in 2025.

The transitional period to adopt the standard will be categorised between three groups, with reporting thresholds requiring the fulfilment of two of three thresholds (total gross assets, consolidated revenue, number of employees), or classified as a controlling entity under the National Greenhouse and Energy Reporting Act (NGER) Act. These are noted as the following:


The Australian Government’s Bill announced in March 2024 is expected to delay the start date for Group 1 entities by at least 6-months and may be further delayed up until 12-months. If the amendments don’t pass by June 2025, mandating climate reporting will fall to the next government, as a federal election is due to be held before / no later than May 2025.

Following is a summary of anticipated start dates for Group 1 entities, based on when the Bill is approved. The anticipated impact from the Bill is currently not expected to change the Group 2 or 3 mandatory reporting commencement dates.

It is expected that the proposed Australian reporting requirements will require sign off by an external audit process.

The below table from the Australian Government Audit and Assurance Standards Board’s consultation paper on Assurance Over Climate and Other Sustainability Information provides the timeframe for requirements to be phased in for Group 1 organisations. As noted, entities are only required to disclose material Scope 3 emissions from their second reporting year onwards.

The paper includes similar tables with proposed dates for Group 2 and Group 3 organisations, and while these will be phased in later, you may wish to refer to the tables for planning purposes.    

Group 1 Probable Assurance Phaisng


In September 2023, a document was released by the Task Force on Nature-related Financial Disclosures (TNFD), a voluntary science-based initiative that is supported by national governments, business and financial institutions worldwide, that included a list of disclosures recommended for adoption. The 14 recommended disclosures were structured around four pillars: governance, strategy, risk and impact management.  These disclosures are designed to meet the corporate reporting requirements, align with the global policy goals in Kunming-Montreal Global Biodiversity Framework and be built from the Task force on Climate-related Financial Disclosures (TCFD) and the ISSB’s Standards.

It is expected future sustainability standards will be advancing quicker over the coming years, as the nature-related disclosures (TNFD) has progressed significantly in the last 2-years. The future of sustainability reporting will strive to cultivate a holistic and integrated approach to thinking.



It is important all organisations start to understand their carbon emissions. These are categorised into the following:

  • Scope 1 – Emissions from sources that an organisation owns or controls directly, such as emissions from fuel in company vehicles.
  • Scope 2 – Emissions that an organisation causes indirectly and come from where the energy it purchases and uses is produced, such as emissions from purchased electricity, steam, heating and cooling for own use by the organisation.
  • Scope 3 – All emissions not covered in scope 1 or 2, created by a company’s value chain. Emissions from downstream and upstream activities across 15 categories as detailed in the below diagram. It is important to understand other emissions not captured by the 15 categories, scope 1 or scope 2 and excluded from the climate-related disclosures.

The below figure from the Greenhouse Gas Protocol Corporate Value Chain Accounting & Reporting Standard Supplement provides a useful visual representation of this information across the three scopes.  

Overview of GHG Protocol scopes and emissions

Overview of GHG Protocol scopes and emissions



  1. Organisations captured by the reporting requirements:

This includes companies that fall into the Group 1, 2 and 3 reporting thresholds as noted in teh first table above. It also includes organisations that are already reporting under the National Greenhouse Energy Reporting (NGER) scheme or an Asset Owners. It is critical that organisations understand their reporting requirements and mandatory commencement dates, understanding in the first-year organisations will be required to provide comparatives.

  1. Organisations captured in other business value chains

Whilst organisations may fall under the reporting thresholds and be exempt from the disclosure requirements, it is important to understand where the organisation may fall on other businesses value chains. Where your organisation falls within another businesses scope 3 emissions, you will be required to provide your scope 1 and 2 emissions in order for other businesses to complete their scope 3 emissions calculations. It is estimated up to 90% of organisations carbon footprint is produced by the upstream and downstream value chain activities. Therefore, it is imperative that all organisations start to understand their carbon footprint.



Organisations seen to be making false or misleading statements about its climate impact, sustainability practices or adherence to the climate-related standards, could face penalties up to $50m for companies or $2.6m for individuals. Therefore, it is critical to establish a Board-led governance structure in overseeing the implementation and quality of the reporting requirements. 



Entities need to ensure that they understand their requirements with mandatory reporting requirements or value chain reporting requirements. For mandatory reporting organisations should start to prepare by considering the following:

  1. Start to understand your scope 1 and 2 emissions.
  2. Reach out to supply chains to discuss data requirements you require, or they require from you.
  3. Identify gaps in your current processes to further refine.
  4. If required, start to set your scope 3 boundaries in line with the 15 categories, and start to engage with internal and external stakeholders to obtain the data.

Whilst the standards are yet to be approved, they are inevitable, and we believe any variations can be expected to be minimal. The emergence of ESG reporting is continuing to grow at a rapid speed and likely to be adopted as a business-as-usual practice in the coming few years. We encourage you to start preparing your organisation as best you can in order to ensure it is best positioned when these standards and disclosures do become mandatory.

As always, we would be very happy to work with you on this area of reporting and provide advice to help you move forward with confidence and minimal disruption to your organisation. Please contact your WLF Advisor if you would like to discuss further.    


Mikayla Baker, Director & Jake Saunders, Advisor  
Audit, Assurance & Advisory 

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Carbon Accounting & ESG Reporting – an evolving priority for your organisation

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