Federal Budget 2024: Potential ESG initiatives for family and mid-sized businesses

Despite not having formal reporting requirements just yet, family and mid-sized business often form part of the value chain for businesses who do have direct reporting obligations. 

With the Federal Budget due to be handed down on 14 May, what can we expect to see for family and mid-sized businesses to assist them with environment, social and governance requirements? 

Scope 1, 2 and 3 emissions explained 

While not currently subject to formal reporting requirements, the contributions of family and mid-sized businesses extend beyond just their operations influencing the broader ESG reporting.

With this knowledge, it’s important that mid-sized and family businesses begin collecting their ESG information in order to be prepared.

Benefits of proactive data collection

Family and mid-sized business can be collecting their ESG data proactively, but this can often be costly from a program implementation perspective and labour costs. The Government should look to invest in automation and innovation within the data capturing space, so that businesses of this size can capture data in a cost-effective way. Through automating this process, business then have the time to plan their broader ESG strategy.

The benefits of collecting their data not only help businesses who will be formally reporting, but it can help mid-sized businesses adapt to customer expectations, attract new customers aligned with sustainability goals, and stay ahead of the omnipresent sustainability curve. Reporting obligations drive positive action, and mid-sized and family businesses have the opportunity to forge ahead before they’re required to report.

Australia’s unique sustainability issues 

At a macro level, Australia has some unique sustainability challenges such as extreme weather events and natural disasters. The Government should invest in businesses who are coming up with long-term solutions for sustainability change, including the collaboration between sustainability experts and first nations communities to help come up with long-terms solutions for natural disaster events.  

Looking forward

The upcoming Federal Budget might provide relief for family and mid-sized businesses to address their ESG requirements. To prepare, mid-sized and family businesses should proactively collect their ESG data. While this process can be costly, government-led investment in automation and innovation will enable cost-effective data capture, allowing businesses to strategically plan their broader ESG initiatives.

Grant Thornton Corporate Tax Partner Vince Tropiano and Private Business Tax & Advisory Partner Michaela Pogson, explore this topic in more detail, here:

Learn more about businesses who meet reporting thresholds