Scope 3: How Organisations Can Prepare in FY26 to Be Ready for FY27 Changes
If you want a realistic picture of Scope 3 readiness, don’t start with a standard. Start with a meeting.
It’s late in the month, Finance is closing, Procurement is chasing rebates, Supply Chain is firefighting service issues, and the ESG team is trying to pull emissions data out of a dozen systems that were never designed for assurance. Someone asks a simple question that no one can answer cleanly: “What are our Scope 3 emissions… and how confident are we?”
That question is about to become a lot less optional.
Across Australia, climate-related reporting is shifting into a more formal regime. For many organisations, FY27 is when the expectations step up again—particularly around Scope 3 (value chain) emissions and the quality of the underlying evidence. The exact start date and requirements depend on your reporting cohort and financial year, but the direction is clear: more disclosure, more scrutiny, and a steady march toward assurance.
So FY26 matters. Not because you need perfect numbers by tomorrow, but because FY26 is the year to build the machine that produces defensible numbers year after year.
This article is a practical FY26 playbook focused on Scope 3 readiness for FY27 changes—written for Australian organisations and the functions who will actually have to make it work: Finance, Procurement, Supply Chain, ESG, Risk, Legal, Internal Audit, IT and the Executive.
First, a plain-English refresher: what “Scope 3” actually means
Most organisations understand:
- Scope 1: direct emissions you control (fuel you burn, refrigerants you leak, equipment you operate).
- Scope 2: emissions from purchased electricity/energy.
Scope 3 is everything else in your value chain—upstream and downstream. It’s usually the biggest share of total emissions for retailers, manufacturers, health services, hospitality, infrastructure operators, and anyone who buys a lot of goods and services or moves product around the country.
Scope 3 typically includes things like:
- Purchased goods and services (often the largest category)
- Freight and logistics (inbound and outbound)
- Waste
- Business travel and employee commuting
- Capital goods (fit-outs, facilities, plant and equipment)
- Use of sold products and end-of-life treatment (for certain sectors)
- Investments and financed emissions (for financial services)
Here’s the catch: Scope 3 lives in other people’s data—suppliers, carriers, contract manufacturers, landlords, customers. Which makes it harder to measure, easier to challenge, and more expensive to assure if you haven’t set it up properly.
What changes in FY27 (and why FY26 is your opportunity)
Australia’s climate-related disclosure regime is being phased in. While the details vary by entity type and reporting cohort, the practical implications for many businesses are consistent:
- Scope 3 becomes a serious reporting requirement (and, for many, a mandatory one in the next phase).
- “Finance-grade” expectations increase—governance, controls, documentation, repeatability.
- Assurance readiness starts to matter early, because what you do in the first years becomes your baseline later.
- Supplier data requests cascade through supply chains—meaning even organisations not directly captured will feel the pressure through customers and partners.
The organisations that cope best don’t treat Scope 3 as an annual reporting exercise. They treat it as an operating capability: a set of roles, systems, controls, and supplier processes that run every month—not just at year-end.
FY26 is the year to build that capability before timelines tighten and the cost of “catch up” explodes.
The FY26 mindset shift: from ESG project to enterprise reporting program
A common failure mode is leaving Scope 3 in a single team (often sustainability) and expecting them to “pull data from the business” when needed.
That approach breaks in FY26 because:
- Finance needs reconciliation to spend and activity (not just estimates)
- Procurement needs supplier engagement embedded into sourcing and contracting
- Supply Chain needs carrier and warehouse data to be captured consistently
- Risk and Legal need defensible statements and documented assumptions
- Directors need confidence that what’s being signed off is supportable
In FY26, Scope 3 becomes a team sport—with Finance-grade discipline.
What each function should do in FY26
1) Board and Executive: set tone, scope and accountability
Scope 3 readiness fails without executive ownership because it competes with everything else.
FY26 priorities:
- Appoint an executive sponsor and establish oversight (audit committee or equivalent).
- Confirm what “good” looks like: not perfect data, but traceable and defensible data.
- Approve a materiality approach (focus on what matters most, document why).
- Fund the minimum enabling work: data architecture, controls, supplier program, and capability.
Practical deliverable by end of FY26:
A clear governance model, reporting calendar, and a resourced program plan that doesn’t rely on heroics.
2) Finance: turn emissions into “audit-ready numbers”
Finance is the bridge between operations and disclosures. If Finance isn’t comfortable, the organisation won’t be comfortable.
FY26 priorities:
- Align reporting boundaries with financial consolidation and entity structure.
- Establish an evidence standard: what documentation is required for factors, assumptions, and calculations.
- Build controls: version control, approvals, review checkpoints, change logs.
- Reconcile major Scope 3 categories to spend and activity drivers (so the numbers make sense).
- Define materiality thresholds and how they will be applied consistently.
Practical deliverable by end of FY26:
A repeatable close process for Scope 3 with documented controls (similar in spirit to financial close—scaled appropriately).
3) Procurement: make suppliers part of the solution (without breaking relationships)
Procurement is where Scope 3 becomes real. Most Scope 3 emissions sit inside purchased goods and services, and suppliers will be asked for data whether they like it or not.
FY26 priorities:
- Segment suppliers by emissions relevance, not just spend (spend is a proxy, not the truth).
- Create a supplier data request approach that is structured and realistic:
- A simple template for baseline data
- A maturity pathway (good / better / best)
- Clear timelines and expectations
- Embed Scope 3 into BAU procurement:
- RFP questions that request emissions data and methodology
- Contract clauses covering data provision, improvement plans, and audit support
- Supplier scorecards that include sustainability metrics (where material)
- Avoid “blanket asks” to all suppliers. Start with the few that drive the majority of impact.
Practical deliverable by end of FY26:
A supplier engagement plan and standard procurement pack (templates, clauses, scoring approach) that can be reused across categories.
4) Supply Chain and Operations: capture activity data that stands up to scrutiny
Supply Chain teams often hold the best data for the most measurable Scope 3 categories—freight, warehousing, waste, and sometimes packaging and returns.
FY26 priorities:
- Map logistics flows that drive emissions:
- Inbound freight lanes and modes
- Outbound distribution (parcel, linehaul, last mile)
- Warehousing energy and handling profiles (where relevant)
- Improve data capture:
- Carrier consignment data (distance, weight, mode, lane)
- Fuel surcharges and activity metrics
- Waste volumes and treatment methods (landfill, recycling, organics)
- Build a “single source of truth” approach:
- Define who owns which datasets
- Standardise how data is captured and stored
- Agree the cadence (monthly beats annual every time)
Practical deliverable by end of FY26:
A clean activity dataset for priority logistics categories (freight and waste are common starting points) with ownership and cadence defined.
5) ESG / Sustainability: design the methodology and keep it usable
ESG teams are crucial—but they shouldn’t be left holding the bag alone. Their job in FY26 is to create a methodology that the rest of the business can actually run.
FY26 priorities:
- Confirm the Scope 3 categories that are material for your organisation (and document why).
- Define calculation hierarchy:
- Use activity-based methods where feasible
- Use spend-based estimates where necessary
- Track a roadmap to improve data quality over time
- Introduce data quality scoring:
- Supplier-specific data (best)
- Industry-average factors (good)
- Spend proxies (starter)
- Confidence ratings and improvement plan for each category
- Build a central methodology register:
- Emissions factors used (and their version)
- Assumptions and boundaries
- Changes year-on-year and why they changed
Practical deliverable by end of FY26:
A methodology pack that is transparent, consistent, and designed for continuous improvement—not a one-off calculation workbook.
6) IT and Data: stop the spreadsheet sprawl
Spreadsheets are fine for prototypes. They’re dangerous as a permanent control environment—especially when the organisation is moving toward more formal reporting.
FY26 priorities:
- Identify where source data lives:
- ERP and spend cubes
- TMS/WMS/carrier portals
- Travel providers
- Facilities and waste contractors
- Supplier portals and SRM tools
- Decide your architecture:
- Central dataset with clear lineage back to source systems
- Defined access controls and versioning
- Automated extracts where possible
- Support workflow:
- Data collection, review, sign-off
- Evidence storage
- Audit trail (who changed what, when, and why)
Practical deliverable by end of FY26:
A controlled data environment that can be reproduced each year, with less manual wrangling.
7) Risk, Legal and Internal Audit: make it defensible before someone else tests it
The risk isn’t only “getting it wrong”. It’s making statements you can’t support later.
FY26 priorities:
- Define what claims you will and won’t make in early years (especially forward-looking targets).
- Review materiality and disclosure language so it’s consistent with evidence.
- Run a pre-assurance style review internally:
- Are assumptions documented?
- Can we trace the numbers back to source data?
- Are controls operating, or just described?
- Ensure risk management processes include climate-related value chain risks and dependencies.
Practical deliverable by end of FY26:
A “pre-assurance findings log” and action plan—fix gaps early, before FY27 pressure arrives.
A practical FY26 program plan (that doesn’t become a monster)
If you’re trying to get ready in FY26 for FY27, here’s a structured approach that works in the real world.
Phase 1: Confirm exposure, boundaries and what “material” means
- Confirm reporting group and timing (don’t guess).
- Align boundaries to financial consolidation.
- Identify likely material Scope 3 categories via:
- Spend screening
- Activity screening (freight, energy, waste)
- Risk screening (high exposure suppliers, sensitive products)
Output: a prioritised Scope 3 category shortlist and boundary statement.
Phase 2: Establish governance and a RACI that actually sticks
- Assign category data owners (Procurement owns suppliers, Supply Chain owns freight, etc.).
- Create sign-off checkpoints and escalation paths.
- Set a reporting rhythm (monthly/quarterly) to prevent year-end chaos.
Output: governance model + reporting calendar + internal controls.
Phase 3: Build the defensible data foundation
- Consolidate datasets: spend, supplier lists, logistics activity, travel, waste.
- Choose methods (activity-based vs spend-based) and document why.
- Apply emissions factors consistently, track versions, and log changes.
- Create a confidence rating system and improvement roadmap.
Output: a central dataset with traceability and documented methodology.
Phase 4: Engage priority suppliers (this is the long-lead item)
Supplier engagement is where timelines usually blow out.
In FY26:
- Start with the suppliers that matter most (by likely emissions, not just count).
- Provide a clear “how”:
- What data you need
- Accepted methodologies
- Due dates
- How it will be used
- Make it easier for suppliers:
- Templates
- Examples
- Phased maturity expectations
- Build it into sourcing and contracting so it becomes BAU.
Output: supplier program launch + standard procurement pack.
Phase 5: Prepare for assurance and embed into decision-making
Even if formal assurance isn’t immediate for every disclosure, the journey is toward more scrutiny.
In FY26:
- Run a dry run: can you reproduce calculations and trace inputs?
- Document assumptions and change controls (especially year-on-year changes).
- Connect Scope 3 insights to actual decisions:
- Supplier selection
- Network and transport strategy
- Packaging changes
- Waste and circularity initiatives
- Capital investment priorities
Output: assurance-readiness assessment + actions + integration into strategy and risk.
Don’t stop at reporting: Scope 3 can unlock cost and resilience benefits
The most mature organisations don’t treat Scope 3 as a compliance tax. They use it to target the biggest value chain hotspots, which often align to operational efficiency.
Common “double win” levers include:
- Transport optimisation (route, mode shift, consolidation, carrier performance)
- Packaging right-sizing and material changes (less damage, lower freight emissions)
- Supplier rationalisation and smarter sourcing (lower embodied carbon, improved resilience)
- Waste reduction and diversion (often immediate savings)
- Product and specification redesign (materials and upstream manufacturing impacts)
In other words: a good Scope 3 program can support cost-to-serve reduction, not just disclosure.
The traps that cause FY27 pain (and how to avoid them)
Trap 1: Waiting for perfect data
You don’t need perfect. You need defensible and improving. Start with estimates, but document them and improve systematically.
Trap 2: Sending 500 suppliers the same email
That’s how you get ignored. Segment suppliers, start with the top contributors, and make the request simple and repeatable.
Trap 3: Treating this as an ESG report
This is moving into formal reporting. Finance-grade controls and evidence matter.
Trap 4: No single source of truth
If your datasets live in inboxes and spreadsheets, you will struggle to reproduce numbers and explain changes year-on-year.
Trap 5: Forgetting the “people” side
Scope 3 is a new capability. It needs training, process clarity, and ownership—otherwise it collapses back into a scramble.
How Trace Consultants can help
Trace Consultants supports organisations to move from “we know we should do something” to a practical, audit-ready Scope 3 program that works across Finance, Procurement and Supply Chain.
Typical support includes:
1) Scope 3 readiness assessment and FY26–FY27 roadmap
- Confirm reporting boundaries and likely material categories
- Assess current data maturity and gaps
- Build a pragmatic plan with clear owners and timelines
2) Methodology and data foundation
- Design calculation approaches that balance accuracy with practicality
- Establish data confidence scoring and improvement pathways
- Build controlled datasets and reporting packs that can be repeated each year
3) Supplier engagement program (Procurement-led, practical and scalable)
- Supplier segmentation and prioritisation
- Templates, guidance notes, and procurement pack uplift
- Embedding emissions data expectations into sourcing and contracting
4) Supply chain emissions hotspots and reduction roadmap
- Freight and logistics activity modelling
- Network and transport opportunities that reduce emissions and cost-to-serve
- Packaging and waste improvement programs linked to measurable outcomes
5) Assurance readiness and governance uplift
- Controls, evidence registers, version control and sign-off workflows
- Pre-assurance reviews to identify gaps before external scrutiny
- Governance and reporting cadence design that prevents year-end chaos
The goal isn’t to create a glossy report. It’s to help you build a capability that stands up to scrutiny and supports better operational decisions.
A simple FY26 checklist (print this)
By the end of FY26, aim to have:
- A defined Scope 3 boundary and prioritised category list
- A RACI and governance model with Finance involvement
- A controlled dataset with traceability back to source systems
- A documented methodology register (factors, assumptions, versions, changes)
- A supplier engagement program launched for priority suppliers
- A pre-assurance style internal review completed with actions logged
- A FY27 reporting plan that doesn’t rely on last-minute heroics
Closing thought
FY27 pressure will arrive whether you’re ready or not. FY26 is your chance to make Scope 3 boring—in the best possible way: repeatable processes, clear ownership, defensible data, and fewer surprises.
If you’d like support to design a practical Scope 3 readiness program across Finance, Procurement, Supply Chain and ESG, Trace Consultants can help.
Final question: If someone asked you to justify your Scope 3 numbers next year—could you show the evidence trail without a scramble?
