THE recent passing of the Federal Labor Government’s ‘Nature Positive’ legislation has resulted in the inclusion of Scope 3 emissions in greenhouse gas reporting.
This has introduced a layer of confusion and panic, particularly for farmers and small businesses.
Scope 3 emissions are indirect greenhouse gas emissions that occur in an entity’s value chain, encompassing both upstream and downstream emissions, including those from financed activities.
This broad definition has not only complicated the regulatory landscape but has imposed unfair burdens on smaller entities such as farmers and small family businesses across the nation.
To be clear – Scope 3 emissions are notoriously difficult to measure and control.
Unlike direct emissions from a company’s own operations or those from purchased energy (Scope 1 and Scope 2), Scope 3 emissions include a vast array of indirect activities.
This includes emissions from the production of goods, transportation, waste disposal, and even the use of sold products.
For farmers, this means their emissions are intertwined with those of various suppliers and buyers, creating a nebulous web of responsibility that is challenging to manage.
The most pressing issue is the uncertainty Scope 3 emissions introduce for farmers and small businesses.
The lack of clear guidelines and support means that these entities are left grappling with how to accurately measure and report their emissions, despite being mandated to do so through amendments to the Corporations Act 2001.
Such uncertainty often translates into significant operational stress and financial strain.
With this change, there is a real risk that larger companies, which are more directly targeted by Scope 3 reporting requirements, may offload their compliance costs and risks onto their smaller suppliers.
This is already happening with the Modern Slavery Act which places significant burden on individual farmers and businesses.
Consequently, a farmer who relies on a major agribusiness for financing or supply may find themselves facing unexpected demands for emission reductions or additional reporting burdens.
Small entities, which often lack the resources or expertise to navigate complex emission calculations, may struggle to meet these new demands.
We must ensure the burden of emissions reporting does not disproportionately harm the very entities that are crucial to our economy and environment.
Hon Nicola Centofanti MLC Leader of the Opposition in the Legislative Council
