News

Author: Ciara Brennan, APPA Sustainability Manager

Australia is rolling out a new regime of mandatory climate-related financial disclosures, which will significantly change how large companies report on emissions, climate risks, and sustainability strategies. These requirements are being introduced through amendments to the Corporations Act 2001 and will be regulated by the Australian Securities and Investments Commission (ASIC). (https://www.asic.gov.au/regulatory-resources/sustainability-reporting)

While most small businesses in the promotional products industry will not be directly required to report (yet), the practical impact will still be substantial. The changes will reshape how large companies select and manage suppliers, meaning many smaller businesses will need to provide emissions and sustainability data to maintain commercial relationships.

Who Must Report—and When

The reporting requirements are being introduced in phases, based on company size. Entities must meet at least two out of three thresholds within each group.

Group 1 (commencing 1 January 2025)

• Revenue of $500 million or more
• Gross assets of $1 billion or more
• 500 or more employees

Group 2 (commencing 1 July 2026)

• Revenue of $200 million or more
• Gross assets of $500 million or more
• 250 or more employees

Group 3 (commencing 1 July 2027)

• Revenue of $50 million or more
• Gross assets of $25 million or more
• 100 or more employees

These entities will be required to prepare annual sustainability reports in line with standards issued by the Australian Accounting Standards Board, including climate disclosures under AASB S2 (climate-related financial disclosures). (https://standards.aasb.gov.au/aasb-s2-sep-2024)

Why This Matters If You’re Not Required to Report

At first glance, these thresholds suggest that most promotional products businesses fall outside the regime. However, this overlooks a key feature of the new requirements: companies must report not only their own emissions, but also emissions across their value chain.

This includes:

• Direct emissions from operations (Scope 1)
• Indirect emissions from purchased energy (Scope 2)
• Supply chain emissions (Scope 3)

Scope 3 emissions typically account for the largest share of a company’s carbon footprint, and they include emissions generated by suppliers, such as manufacturers, distributors, and product providers.

For businesses in the promotional products sector, this creates a direct link between your operations and your customers’ compliance obligations.

How This Will Affect Your Business Relationships

Companies subject to mandatory reporting will need reliable data to meet disclosure requirements. As a result, they are likely to request detailed information from suppliers, including:

• The carbon footprint of products
• Materials used (e.g. recycled, certified, or sustainable inputs)
• Manufacturing processes and locations
• Freight and logistics emissions
• Environmental certifications or sustainability policies

These requests are not discretionary. Reporting entities must demonstrate that they have robust, supportable data underpinning their disclosures. This will drive more structured and formalised information requests across supply chains.

Commercial Implications for Promotional Products Suppliers

The introduction of mandatory climate disclosures is expected to influence procurement practices in several ways:

• Increased Supplier Scrutiny
  
  Procurement teams will assess suppliers not only on price and quality, but also on their ability to provide emissions data and support sustainability reporting.
  
  
• Preference for Transparent Suppliers
  
  Businesses that can supply clear, credible environmental data will be easier to work with and may be preferred in tender processes.
  
  

• Potential Loss of Business Without Data

  Suppliers unable to provide emissions or sustainability information may face:

  • Delays in onboarding
  • Exclusion from preferred supplier lists
  • Reduced competitiveness in bids

• Greater Demand for Sustainable Products

There is likely to be increased demand for products with lower environmental impact, verifiable sourcing, and clear sustainability credentials.

What Businesses Should Do Now

Although formal reporting may not apply, preparation is increasingly necessary. Practical steps include:

• Start Gathering Data
  
  Engage with manufacturers and upstream suppliers to obtain information on

  • Materials and sourcing

  • Energy use and production processes  

  • Transport and logistics

• Understand Your Key Products
  

  Focus first on your highest-volume or highest-value products, as these are most likely to be scrutinised.

• Develop Basic Documentation
  
  Prepare simple, consistent information that can be shared with clients, such as:
  
  • Product sustainability summaries
  • Statements on materials and sourcing
  • Any available emissions estimates

• Engage With Customer Requirements
  
  Be proactive in discussions with larger clients about what information they will need and how you can support them.

A Structural Shift in the Market

The introduction of mandatory climate disclosures represents a broader shift in the Australian business environment. Climate and sustainability data are becoming standard components of commercial decision-making, particularly among larger organisations.

For the promotional products industry, the key point is not regulatory compliance, but market access. Businesses that can provide the required information will be better positioned to maintain and grow relationships with large clients. Those that cannot, may find it increasingly difficult to compete.

Key Takeaway

You may not be required to report under Australia’s new climate disclosure laws, but your customers likely will be.

As a result, your ability to provide accurate, credible emissions and sustainability information will become an essential part of doing business.

Preparing now will help ensure you remain a viable and competitive supplier as these requirements take effect.