MODELLING from the Federal Treasury department has suggested new emissions reporting rules will cost companies between $1m and $1.3m initially and will have an ongoing cost of $500,000 to $700,000/year.

As Beef Central reported yesterday, a surprising number of family cattle businesses meet the thresholds of having to directly report all their emissions to the Government.

This is not producers having to report their emissions to processors and other supply chains as part their ‘scope 3’ emissions, this is producers having to report all the emissions (scope 1, 2 and 3) across their own supply chain to the Federal Government.

In light of comments on yesterday’s article suggesting the figures were overstated, it is worth taking a further look at the Treasury modelling they came from.

When the Federal Government announced its target to reduce emissions by 43pc by 2030, it also announced it was going to make “large entities” report their climate risk.

Treasury then modelled the potential impact and estimated the costs.

All things being equal and comparing with a baseline option of continuing to operate under the status quo, under Treasury’s recommended approach (option 1b), this policy is expected to add between $1.0 million to $1.3 million per year per entity in initial transition costs to the regulatory burden of captured entities and have a number of benefits that are difficult to quantify, including reducing the cost of capital for these entities. Costs are expected to stabilise and fall over time, resulting in ongoing costs of between $500,000 to $700,000 per year per firm.

If the size of some of Australia’s family cattle companies is anything to go by, Treasury’s claim that only 1800 companies economy wide is disputable.

By 2027, companies who meet two of three criteria (have a turnover of $50m or more, an asset value of $25m or more or more than 100 employees) will have to incur those costs.

Treasury says the costs of reporting will depend on the size of the company and it has not done any modelling for specific industries that Beef Central is aware of. Agriculture Department officials were quizzed about the industry’s exposure to the laws in Senate Estimates last month, they provided little more detail than Treasury.

Beef Central understands some of the big rural accounting firms are working on the detail to provide some clarity on what will be involved for those businesses. We are currently trying to contact them.

One email from the accountant of a company liable to report said the legislation was going to be difficult to comply with, costly and could require a new employee or team of employees to deal with the requirement.

According to guidance about the laws on ASIC’s website, the companies will need to report:

• The entity’s material climate-related financial risks and opportunities
• the entity’s metrics and targets for the financial year relating to climate that are required to be disclosed by the sustainability standards, including in relation to scope 1, 2 and 3 emissions of greenhouse gas; and
• any information about the entity’s governance, strategy, or risk management in relation to these risks, opportunities, metrics and targets.