Currently, businesses who meet reporting thresholds will need to report on material climate-related risks and opportunities, including metrics and targets related to Scopes 1, 2, and 3 emissions from 1 July 2025.
Contents
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.
Scope
Description
Examples
1
Direct emissions from your business
Pollution created by company owned vehicles
2
Emissions from your energy providers
Electricity used to power a company
3
Emissions from those up and down your value chain
Employee commuting for business travel
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:
The video is playing.This video is playing in mini-player mode.
The Government has announced revisions to several tax measures in the Budget, affecting capital gains tax treatment for small businesses, a special carve-out for start-ups, and a conditional exclusion for discretionary testamentary trusts from the 30 per cent tax on trusts.
Explore how the Federal Budget 2026–27 reshapes M&A in Australia, with CGT changes, trust tax reforms and implications for deal structuring and transaction timing.
In this episode of Beyond the Numbers with Grant Thornton, Corporate and International Tax Partner Vince Tropiano unpacks the changes one week on, covering what was announced, key structuring considerations and, most importantly, why a conversation with your adviser to model potential implications is the best place to start.
Subscribe now to be kept up-to-date with timely and relevant insights, unique to the nature of your business, your areas of interest and the industry in which you operate.
