With mandatory climate reporting edging closer and environmental, social and governance (ESG) pressure mounting, Australia’s middle market businesses are navigating a complex landscape.
The latest Business Radar report from Pitcher Partners (Australia), a Baker Tilly network member, reveals a growing awareness, but also a gap between perception and preparation – putting some at risk of falling behind in both compliance and competitiveness.
The report captures the sentiment of 140 owners and leaders of Australian middle market businesses across a range of growth stages, states and industries.
Aware but uncertain
Mandatory climate reporting legislation
Awareness of mandatory climate reporting is growing across Australia’s middle market, but clarity on what it actually involves is still lacking.
Six in ten business leaders say they’re familiar with the new requirements, and just over half feel confident about what’s needed for compliance.
Yet when it comes to actual preparedness, the picture shifts: 75% admit they’re either not at all or only somewhat ready for what’s coming.
The gap is even more pronounced among smaller businesses (with turnover under AU$50 million), where 80% report being unprepared, compared to 46% of larger firms (over AU$200 million).
While some elements of the reporting framework feel familiar, the most complex and unfamiliar territory is greenhouse gas emissions accounting — especially indirect Scope 3 emissions, which fall outside of a business’s direct control.
A cautious approach
Mandatory climate reporting is just one piece of the ESG puzzle. While not all elements are required by law, overlooking them could mean missing out on strategic and financial advantages.
Only 15% of Australian middle market leaders have started taking active steps to improve their business through an ESG lens, with a further 36% planning their initiatives.
Almost half have taken no action, indicating that only those with a strategic imperative are electing to report voluntarily. Which makes sense – reporting before the mandatory requirement can provide time for these businesses to enact improvements, with future reporting to highlight improved outcomes achieved.
Perceived burden slows progress
For many in the middle market, mandatory climate reporting is still viewed more as red tape than a strategic opportunity.
The slower pace towards compliance appears tied to a perceived lack of value — seen more as an administrative burden than a business benefit. Among those yet to take action, just 21% view the requirements positively, while a significant 63% are neutral and 16% view them negatively.
But the story shifts dramatically for those who have started the journey: 60% of proactive businesses report a positive view of the requirements, with minimal negative sentiment.
With many middle market businesses remaining outside the scope — unless pulled in via supply chain emissions reporting – and uncertainty around the direction of international regulation, it’s unsurprising businesses are progressing with caution.
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