How Mandatory Climate Reporting and The National Construction Code’s Proposed Solar Mandate Are Shaping Businesses

Most businesses are unknowingly paying at least 40% too much for electricity, directly impacting their bottom line. As Australia moves toward mandatory climate reporting in January 2025 and stringent energy regulations, controlling energy costs and demonstrating sustainability have never been more critical.

New Reporting Mandate and The Construction Code’s (Proposed) Solar Obligations: A Dual Focus on Sustainability

ASIC's Climate Reporting Requirements

From 2025, large Australian businesses will need to include climate-related financial disclosures in their annual sustainability reports. While initially targeting large entities, the ripple effects will soon reach medium and smaller businesses. Some medium-small businesses are currently even being asked to provide sustainability credentials when dealing with larger businesses. This new obligation aligns with global standards, encouraging businesses to disclose and manage their carbon footprints.

In the near future, entities required to report under the regime are:

Reporting entities	Group 1 First annual reporting periods starting on or after 1 Jan 2025	Group 2 First annual reporting periods starting on or after 1 Jul 2026	Group 3 First annual reporting periods starting on or after 1 Jul 2027
Large entities and their controlled entities meeting at least two or three criteria	Consolidated revenue: $500 million or more EOFY consolidated gross assets: $1 billion or more EOFY employees: 500 or more	Consolidated revenue: $200 million or more EOFY consolidated gross assets: $500 million or more EOFY employees: 250 or more	Consolidated revenue: $50 million or more EOFY consolidated gross assets: $25 million or more EOFY employees: 100 or more
National Greenhouse and Energy Reporting (NGER) Reporters	Above NGER publication threshold in s 13 (1) (a) of the NGER Act 2007	All other NGER reporters	N/A
Registered schemes, Registrable Superannuation Entities and retail Corporate Collective Investment Vehicles	N/A	$5 billion assets under management or more	N/A

Sustainability leaders note a shift in expectations from stakeholders and customers, who increasingly demand transparency on sustainability or carbon footprint. Businesses may soon face the inevitable question: “What are you doing to reduce your carbon footprint?” or along these lines.

The National Construction Code (NCC) 2025 (Proposed) Solar PV Mandates

The Australian Building Codes Board (ABCB) is proposing changes to Volume One of the National Construction Code. Simply speaking, the NCC defines the worst building that once can build in Australia. Hence, the following change is a significant step in the industry.

The changes provide cost-effective, fuel and technology neutral ways for buildings to reduce emissions and move towards a net zero future. The changes cover new commercial buildings (Class 3 and Class 5 to 9 buildings) and the common areas of new apartment buildings (Class 2 buildings).

The proposed change of NCC 2025 on mandated solar PV installations on commercial and multi-residential buildings could complement the climate reporting mandate, aiming to reduce operational emissions.

Key provisions include:

* Maximised Roof Utilisation: Solar panels must cover all suitable roof spaces, balancing on-site energy generation with minimal grid impact. There would be exclusions (trafficable areas, plant spaces, spaces shaded for more than 10% of daylight hours, etc.). Alternatively, requiring on-site solar PV system with output rating per m2 of conditioned space.

* Emission Balancing: Additional PV is required for buildings using gas-based
systems to offset higher emissions.

* Future-Proofing for Batteries: Infrastructure must accommodate future battery storage for renewable energy.

These measures promote energy efficiency while helping businesses manage rising energy costs.

The Business Case for Action

1. Financial Imperatives

Electricity overpayments, combined with the costs of meeting climate obligations, could compromise your business’s ability to adapt. By optimising energy use through measures like solar installations, businesses can control costs and improve their bottom line. Solar PV is still the cheapest form of energy in Australia, with The Levelised Cost of Electricity (LCOE) for solar power in Australia can be below 6c/ kWh. Even if you’ve done a great job negotiating your retail energy rate to as low as 7c/ kWh, network, AEMO and environmental charges would most likely bring your bundled peak rate to well above 14c/ kWh.

2. Stakeholder Expectations

As larger businesses adopt mandatory disclosures, medium and small enterprises working with them may need to provide sustainability credentials. Meeting these expectations not only secures business relationships but also enhances market positioning.

3. Future-Proofing for Compliance or Business Survival
Adapting to these changes now ensures readiness for stricter regulations and
expectations in the future, protecting your business from potential disadvantages when tendering or trying to get sales and reputational risks.

4. Solar PV is a clear statement of sustainability commitment
Unlike many energy efficiency measures that work behind the scenes, Solar PV is highly visible to both your customers and stakeholders. When people see your building or even check it out on Google Maps, they’ll notice the solar panels, reinforcing your commitment to sustainability. You can take this visibility a step further by displaying real-time solar generation data in your lobby or sharing it on your website. This transparency not only boosts your brand's eco-credentials but also invites customers and stakeholders to perceive more value from your business.

Take Action Today

To thrive in this new era of sustainability, businesses must prioritise looking at adopting onsite renewable energy.

By reducing energy costs and committing to sustainable practices, your business can not only comply but also thrive in the rapidly evolving sustainability landscape. The time to act is now.

For references, explore ASIC’s climate reporting media release and NCC’s solar PV provisions.