Integrate energy and carbon as mandatory climate reporting looms

Stock image ex Canva for Wattwatchers blog post on integrated carbon and energy management

Australian enterprises need to prepare for mandatory reporting of climate-related information, which is set to be phased in from mid-2024. Having the right data to integrate energy and carbon management will be more important than ever. Nimble Internet of Things (IoT) wireless energy monitoring – enabling secure access to real-time, highly-granular electricity data – helps companies to cost-effectively visualise, manage, optimise and accurately report energy and carbon in tandem. 

It’s being billed as the biggest change to corporate reporting in Australia in a generation, and could start in less than six months.

And it comes at a critical time for the built environment, especially commercial and industrial sites, where decarbonisation, electrification and renewables are all in hyperdrive.

From July 1 this year, the start of FY2025, large companies (>500 employees*) in Australia will be mandated to include climate-related information in their general financial reporting. (Note that depending on feedback to a final round of consultation, the start date could still be moved back by six months to 1 January 2025, which is less than 12 months away.)

Medium-sized companies (>250 employees*) will follow a year later, in FY2026, and smaller companies (>100 employees*) the year after that, FY2027. 

Enterprises with <100 employees are being exempted.

*See the table below (published on page 2 of this Treasury consultation paper) for the full definitions of large, medium and smaller sized companies, and other criteria for reporting entities. 

Scope 3 reporting

Companies also will need to start reporting their Scope 3 carbon emissions, as well as Scope 1 and 2^.

^See more information on Scope 1, 2 and 3 definitions here. At a high-level, Scope 1 is emissions from direct sources such as gas burned on-site for an industrial purpose; Scope 2 is indirect sources of energy, notably electricity from the grid; and Scope 3 are indirect emissions across the value chain, including things like staff travel and working from home, and emissions related to customers using products and services such as bank mortgage holders and building tenants.  

Scope 3 reporting, however, is being phased in on a slightly longer timetable, only coming into force in the second year of the new mandatory reporting requirements (i.e. FY2026 at the earliest for large companies).

Final consultations still open

While legislation is still to be passed by the Australian Parliament in the first half of the 2024 calendar year, the draft law was released by Australian Treasurer Jim Chalmers on January 12, and is open for public feedback until February 9.

Another ‘exposure draft’ consultation process, by the Australian Government’s Australian Accounting Standards Board (AASB), remains open for stakeholder feedback until March 1. 2024.

The Albanese Government is ‘Australian-ising’ standards already developed by the International Sustainability Standards Board (ISSB), which were released in mid-2023.

It is seeking to align with global frameworks based on four pillars: governance, strategy, risk management, and targets and metrics.

The new ISSB standards are significantly modelled on the earlier Task Force on Climate-Related Financial Disclosures (TCFD) approach.

While many companies may be familiar with TCFD through their voluntary Environment Social Governance (ESG) reporting, the mandatory model is expected to require more quantitative data.

ESG drivers

The Australian Securities and Investment Commission (ASIC), which oversees company financial reporting in Australia, says that Environmental Social Governance (ESG) issues are driving ‘the biggest changes to financial reporting and disclosure standards in a generation’.

Data visibility will be crucial to meeting the new expectations, putting pressure on traditional solutions for sub-metering, Building Management Systems (BMS) and Environmental Management Systems (EMS).

While energy and carbon aren’t the only ‘ESG issues’ that companies need to grapple with, they are the key ones for ‘climate-related disclosures’.

The good news is that the same metering and monitoring solutions can help managers to optimise energy and carbon reduction performance together, and to report accordingly.

This makes abundant sense in a world of Net Zero (and True Zero too), with the energy transition from fossil fuels to renewables in full swing, and the ‘electrification of everything’ on a rapid rise.

Data-driven insights

Building owners, facility managers and even tenants face a sometimes dazzling array of opportunities, risks and responsibilities, and they need data-driven insights to set the right strategies, guide their actions, and validate the outcomes.

While the old stalwart of energy efficiency remains as vital as ever to manage both costs and emissions, there’s a lot more for energy and carbon managers to grapple with.

Think electrification and degasification in the built environment, including the need to provide for electric vehicle (EV) charging in both new-build and retrofit scenarios, and also the changing and more variable ‘carbon intensity’ of electricity as more and more renewables enter the grid.

Now there’s concepts like 24/7 carbon, with high-resolution carbon accounting based on short-term measurements (e.g. every 30-60 minutes) rather than annualised averages (i.e. traditional ‘carbon factors’ for different jurisdictions).

And ‘grid-interactive efficient buildings’, where energy flows and carbon reductions are coordinated with the electricity grid to add demand flexibility to the toolkit for energy and carbon managers.

FOOTNOTE

By integrating carbon and energy management, reporting entities can get more bang for their data gathering buck.

The Energy Institute says: Energy and carbon management is a part of an organisation’s response to climate change, energy prices, and security of supply. It involves elements of engineering, business and project management, accountancy, marketing, psychology and other disciplines. It requires an understanding of how to manage different activities causing GHG emissions and knowledge about advantages and disadvantages of different energy supply sources. Fundamentally, it is about understanding and incorporating energy and carbon data into strategic business decision-making. 

WANT TO KNOW MORE ABOUT MONITORING SOLUTIONS FOR ENERGY AND CARBON MANAGEMENT? Get more information about Wattwatchers hardware and software options, or contact us to talk with our Sales team.