Mandatory climate-related reporting is being phased in across Australia, and midmarket companies are firmly in scope over the next few years. These businesses will be expected not just to disclose emissions, but to explain how climate-related risks are governed, overseen and integrated into decisions.
At the same time, regulators and investors are paying closer attention to greenwashing and weak climate disclosures, which can quickly damage a company’s reputation and credibility.
The question for midmarket leaders is simple:
If you had to report tomorrow, could you clearly show how climate-related risks and responsibilities are governed in your business – and would that story stand up to scrutiny?
Regulatory Pressure Meets Reputation Risk
For midmarket business, the risk now sits at the intersection of regulation and reputation:
- Regulatory risk: Climaterelated disclosures are being rolled out in three cohorts by size, capturing entities down to around $50m revenue and 100 employees. Regulators have been clear that entities in later cohorts are expected to start preparing now – not wait until their first reporting year.
- Reputational and greenwashing risk: Claims about “net zero”, “low carbon” or “sustainable” operations are a current enforcement focus, with regulators targeting statements that are not backed by credible governance, data and oversight. A weak or vague governance story can quickly undermine brand trust with investors, customers and staff.
In other words, it is no longer enough to have good intentions or a few climate initiatives. Midmarket firms are expected to show that climate-related risks are treated like any other material business risk – with clear governance behind them.
Warning Signs Your Governance May Not Hold Up
Many midmarket organisations already have some climate-related activity – emissions data, energy projects, a sustainability statement – but little structure around who owns what. Common red flags include:
- Climate or ESG risk is mentioned in a policy, but there is no clear executive or boardlevel owner for climate-related risks.
- Climate-related work is happening in pockets (e.g. sustainability, operations, finance) without a clear line of sight to governance or risk committees.
- Major decisions on sites, suppliers, capital expenditure or strategy rarely include a documented view of climate-related risks or opportunities.
- Difficulty in describing climate governance clearly in a sustainability or climate report, or support it with evidence if questioned by regulators, investors or auditors.
If any of this sounds familiar, your organisation may be exposed – both when mandatory climate reporting reaches your cohort, and in the eyes of stakeholders looking for credible climate leadership.
Why MidMarket Businesses Need to Act Early
Experience from the first reporting cohort shows that building credible climate governance takes time – to define roles, tighten processes, connect data to decisions and lift board literacy. Leaving this until the year you first have to report can lead to:
- Rushed structures that do not match how your business really operates
- Patchy documentation that is hard to defend under audit or regulator review
- Heightened risk of inconsistent messaging between your financials and climate-related disclosures, which investors and regulators are increasingly watching for.
Acting early gives midmarket businesses space to reduce both regulatory and reputational risk – and to present a more confident, coherent story to banks, investors, customers and staff.
See Your Gaps in Minutes: Climate Governance Quiz
The Ecoefficiency Group works with Australian organisations to get ready for mandatory climate reporting, including climate risk analysis, governance support, data and disclosure preparation. We specialise in mid-market size organisations.
To help midmarket firms quickly understand their exposure, The Ecoefficiency Group has developed a short Climate Governance Quiz aligned with emerging regulatory and stakeholder expectations.
The quiz will help you to:
- See whether your current governance approach is likely to meet mandatory reporting expectations
- Identify key governance gaps that could create regulatory or reputational risk
- Understand where to focus effort before reporting requirements and external scrutiny reach your organisation
The Quiz provides suggestions of what action you can take next to improve your governance. The Ecoefficiency Group can also help you take the next step through a free 20 min discussion.
If your business is moving toward mandatory climate reporting, now is the time to test your governance. Take The Ecoefficiency Group’s Climate Governance Quiz to see how ready – and how exposed – you really are.