Understanding Carbon
Why Every Business in the Supply Chain Needs to Get Fluent, Fast
A collaboration between Circular Design Thinking and Tucker Environmental
There is a date worth putting in the diary: 1 July 2027. That is when Group 3 entities under Australia's new mandatory climate reporting regime will need to start disclosing their Scope 3 emissions, on top of the Group 1 and Group 2 businesses already phasing in from 2025 and 2026.
If your business is not one of the larger reporting entities, it is tempting to assume this does not apply to you. It does, indirectly, and probably sooner than you think. Scope 3 is, by definition, everything that happens up and down a company's supply chain. If you supply goods, materials, services or logistics to a business that falls into Group 1, 2 or 3, your emissions data is very likely to become part of their reporting obligation. Large corporations will be asking their suppliers for carbon data well before their own reporting deadlines land, so the practical timeline for many small and mid-sized businesses is already underway.
This is exactly the kind of complexity we like to unpack together. Tucker Environmental brought the technical grounding in carbon accounting, and CDT brought the circular design lens, and between us we put together a plain-language guide to what carbon accounting actually involves. Here is the simplified version.
Why carbon accounting matters
Carbon accounting is not just number-crunching for its own sake. Done well, it helps an organisation monitor its greenhouse gas emissions, reduce its footprint, improve energy efficiency and set credible targets. It is also, increasingly, the language stakeholders, financiers and large customers expect a business to speak.
The three scopes, explained simply
Emissions are grouped into three scopes, and understanding the difference is the first step to getting reporting right.
Scope 1: Direct emissions These come from sources a company owns or controls outright.
Mobile combustion: fuel burnt in company vehicles, whether that is trucks, cars, vans or forklifts.
Stationary combustion: fuel burnt on-site, in boilers, generators or gas burners.
Fugitive emissions: unintentional leaks, such as refrigerant escaping from fridges or air conditioning units.
Physical or chemical processing: emissions released during the manufacture or processing of materials such as cement or chemicals.
Scope 2: Indirect emissions from purchased energy These come from energy a business buys in rather than generates itself: purchased electricity, steam, heat or cooling. For most businesses, this is dominated by electricity use, and the data usually sits right there on the power bill.
Scope 3: Everything else in the value chain This is where it gets interesting, and where the July 2027 deadline bites hardest. Scope 3 splits into upstream and downstream emissions.
Upstream covers what happens before a product or service reaches the reporting company: purchased goods and services, capital goods, fuel and energy-related activities not already covered in Scope 1 or 2, upstream transport, waste generated in operations, business travel, employee commuting and upstream leased assets.
Downstream covers what happens after: transport and distribution of sold products, processing of intermediate products, use of sold products by end customers, end-of-life treatment, downstream leased assets, franchises and investments.
For most organisations, Scope 3 is the largest slice of the emissions pie, and it is also the hardest to measure, because the data lives with someone else. That someone else might be you.
What this means if you are a supplier
If a large corporation you supply is preparing for mandatory reporting, expect a request for your emissions data, if it has not landed already. Being ready with good Scope 1 and Scope 2 numbers, and a credible starting point on Scope 3, is quickly becoming a commercial advantage rather than a compliance chore. It signals to larger partners that you understand where your business sits in their reporting obligations and that you are a low-friction supplier to work with.
Where to start
You do not need to measure everything perfectly on day one. Begin by working out which of the emission categories genuinely apply to your business, gather the primary data you can get your hands on such as fuel receipts, electricity bills and travel records, and use industry average emissions factors to fill the gaps where primary data is not yet available. Refining the picture over time is entirely normal, and expected, under the Greenhouse Gas Protocol methodology that underpins Australia's new regime.
Carbon accounting can look intimidating from the outside. Broken down scope by scope, it is manageable, and increasingly, it is simply part of doing business with the larger end of the market.
Circular Design Thinking works with clients across design, fitout and construction to build practical, credible sustainability foundations, including carbon literacy and Scope 3 readiness. Tucker Environmental provides the technical carbon accounting expertise behind this guide.
