Why finance should own sustainability reporting

Climate reporting is no longer on the horizon. From 1 January 2026, large Australian companies will be required to disclose their emissions under the Australian Sustainability Reporting Standards (ASRS).

For finance teams, this is an extension of your core responsibilities. The principles that underpin financial reporting include accuracy, auditability, completeness, and control. These now apply directly to sustainability disclosures and finance should be leading that process.

Carbon reporting is now financial reporting

The ASRS is based on the ISSB’s IFRS S2 standard, which aligns closely with the GHG Protocol. It requires companies to report their emissions using consistent reporting boundaries, document all data sources and estimation methods, and provide disclosures that can withstand audit scrutiny.

These requirements mirror how financial statements are prepared and assured. Sustainability reporting is no longer a separate exercise led by sustainability teams, it's now part of regulated corporate disclosure.

For finance professionals, this should feel familiar. You already own the systems and controls that can support this kind of reporting. Trying to bolt sustainability data onto the side of the business, disconnected from your financial systems, doesn’t work, especially when audit requirements come into play.

Scope 3 emissions are a general ledger exercise

One of the biggest challenges in sustainability reporting is Scope 3 emissions: the indirect emissions from upstream suppliers and downstream customers.

To estimate these, you need visibility into activities like:

• Freight and distribution
• Business travel
• Purchased goods and services
• Capital goods
• Waste
• Use of sold products
• Financed emissions

At their core, Scope 3 categories map directly to how your business spends money. The general ledger is the best starting point. It's structured, it's complete, and it already reflects your reporting boundary.

To calculate Scope 3 emissions, you can:

1. Start with the general ledger — exclude irrelevant accounts and identify emissions-relevant spend.
2. Categorise accounts using standard Scope 1, 2, and 3 categories aligned with the GHG Protocol.
3. Apply emissions factors from reliable databases (e.g., National Greenhouse Accounts, IELab, DEFRA).
4. Source activity data (e.g., electricity bills, fuel invoices, travel reports) for higher-accuracy categories.
5. Reconcile spend and activity data to check for completeness.
6. Document everything in a “basis of preparation” that auditors can follow.

This is very similar to how finance already handles cost allocation or indirect tax mapping. The process is analytical, data-driven, and traceable, and it relies on systems that finance already owns.

Assurance will require audit-ready data and process

Assurance over climate disclosures will eventually be required under ASRS, starting with limited assurance and moving toward reasonable assurance. That means your carbon data needs to be treated with the same level of rigour as your financials.

Auditors will expect to see:

• A clear basis of preparation
• Evidence for how data was collected or estimated
• Justification for assumptions and exclusions
• Reconciliation between emissions estimates and financial records

This isn’t something that can be handled in a standalone spreadsheet by a single sustainability lead. It requires a controlled, repeatable process that aligns with existing financial governance practices.

The role of sustainability teams is still critical, but different

Sustainability teams remain essential. They bring subject matter expertise, lead engagement with suppliers and internal stakeholders, and help define what’s material. But they often don’t have access to the systems or financial data needed to build a complete emissions inventory.

That’s where finance comes in. When finance leads the data and controls side of the process, and sustainability guides strategy and context, the result is stronger, more reliable reporting, and fewer gaps when audit season rolls around.

Spreadsheets can get you started but they won’t scale

Many organisations will begin with spreadsheets. That’s reasonable for a first-time inventory. But as reporting becomes annual, and assurance is introduced, the limitations of spreadsheets will become clear.

Issues like version control, data integrity, and audit trail management make spreadsheets difficult to scale. Purpose-built carbon accounting software can reduce that risk by:

• Integrating directly with your GL
• Categorising spend into GHG Protocol-aligned categories using AI
• Matching activity data with appropriate emissions factors
• Extracting consumption data automatically from fuel and energy invoices
• Maintaining a documented calculation trail for auditors

A system like Avarni helps finance teams move from a manual, spreadsheet-based approach to a structured, audit-ready process. While spreadsheets might be a starting point, adopting software early ensures the methodology is consistent, the data is accessible, and everyone has visibility across the business. This is a core reporting requirement that needs to be embedded into your financial systems and controls now, to ensure consistency, visibility, and audit readiness from day one.

This responsibility sits with finance

Finance teams are already accountable for what goes into the annual report. As emissions data becomes part of that disclosure, finance needs to bring sustainability reporting into the fold, applying the same discipline, process, and standards.

This is about recognising that the data, controls, and governance required for emissions reporting closely mirror the structures finance already manages. You don’t need to be climate experts, but you do need to take responsibility for the reporting process. Finance is best positioned to ensure it’s complete, consistent, and audit-ready.

Summary

• ASRS brings emissions reporting into the scope of regulated financial disclosure.
• Finance teams are best equipped to lead the process, given their control over systems, data, and audit readiness.
• Scope 3 emissions can be estimated using general ledger data, following a methodical, traceable process.
• Assurance will require documented methodologies, source data, and clear reconciliation — areas already familiar to finance.
• Sustainability teams still play a critical role, but the reporting function needs to live within finance.
• Spreadsheets are a starting point, but not a scalable solution; purpose-built software supports audit readiness and process control.
• Finance doesn’t need to become sustainability experts, but it does need to own the reporting process.