Benchmarking SME decarbonisation policies ‑ Country notes: Australia
Table of contents
This country note highlights recent decarbonisation trends in Australia, examines information on the environmental footprint of Australian SMEs, and outlines main government policies for SME decarbonisation. Australia has made progress on its pathway to net-zero emissions by 2050 by reducing GHG emissions by 27% in 2024 compared with 2005 levels. However, per-capita GHG emissions remain above OECD average. As significant contributors to GHG emissions, Australian SMEs are central to achieving the net-zero target. While many recognise the importance of reducing emissions and energy consumption, they are uncertain about the most effective reduction strategies. To support SME decarbonisation, federal and state governments, along with other key stakeholders, have introduced a range of financial incentives, including green tax credits and green loan programmes. These are complemented by voluntary training and certification initiatives, such as Climate Active. The recently introduced mandatory climate-related disclosure standards for large firms and financial institutions have helped build support for SMEs to measure and report their emissions and prompted financial institutions to develop specialised finance products to facilitate SME decarbonisation in key sectors.
In recent years, Australia strengthened its climate ambitions, starting with the 2022 Climate Change Act, which aims to reduce emissions by 43% by 2030, following 62%-70% below 2005 levels by 2035, and achieve net-zero emissions by 2050. To achieve the goals of the net zero plan, Australia developed a sectoral emission reduction plan for six sectors: Electricity and energy, Agriculture and land, Built environment, Industry, Resources, Transport.
In 2024, the largest sources of energy in Australia were oil (36%), natural gas (27%), coal (26%), followed by solar, wind and other renewables (6%).1 In the same year, the largest sectors by GHG emissions were the electricity and energy sectors (34%), transport (22%), resources (production of minerals, oil, gas, and coal) (22%), agriculture (19%) and industry (14%) (Figure 1).
In MtCO2-e, total net emissions = 447 MtCO2-e
Note: The sectors cover the following subsectors: Transport sector covers light and heavy road transport, rail, maritime vessels, aviation, and the construction of transport infrastructure and support services. Built environment sector covers residential, commercial, and public buildings as well as urban open spaces and water infrastructure. Electricity and energy sector covers the generation of electricity, manufacture of petroleum products, the supply of gas, and other related services. Resources sector covers the exploration and production of minerals, oil and gas, and coal resources. The industry sector covers the manufacturing and processing of goods, for domestic use and as exports. Agriculture and land sector covers farming, land management, forestry, and fisheries. Land sector contains vegetation and soils that can both emit and sequester carbon dioxide; in 2024 it was a net carbon sink.
Source: Commonwealth of Australia (2025[1]), Australia’s Net Zero Plan, https://www.dcceew.gov.au/sites/default/files/documents/net-zero-report.pdf.
In recent years, Australia has made progress in decarbonising its economy. Emissions from businesses and households were reduced by 27.4% from 2005 to 2025.2 This progress can be in large part attributed to the land use sector including decreased land clearing and improved management of vegetation and soil (Commonwealth of Australia, 2024[2]). Progress has also been made through the reduction of coal as part of country’s energy mix and an expansion of renewables, with over 18 GW of wind and solar added to the grid capacity since 2021. With over four million rooftop solar installations in both households and small businesses in 2024, Australia is a global leader in this category.
The country succeeded in decoupling GHG emissions from GDP growth. However, since 2020, energy supply and production-based CO₂-emissions have shown a slight increase (Figure 2) (OECD, 2025[3]). Also per-capita greenhouse gas emissions, both production- and demand-based, have declined since the mid-2000s but remain above the OECD average, largely due to Australia’s sizeable mining sector and continued reliance on fossil fuels (OECD, 2025[3]).
Index 2000 = 100
Source: OECD (2025[3]), from the OECD Green Growth database, OECD Environment Statistics, https://doi.org/10.1787/data-00665-en, based on OECD and IEA data.
According to the latest available data of the Australian Bureau of Statistics during the period 2014-15 businesses with fewer than 200 employees accounted for 29% of all business-sector electricity use and 27% of natural gas use (Fawcett and Hampton, 2020[4]). A more recent breakdown of the SME share of GHG emissions is not available in official statistics. However, it is reasonable to assume that SMEs account for a substantial share of aggregate GHG emissions in Australia, due to the presence of SMEs across industries including in small-scale manufacturing, agriculture, transport, retail, and construction. Recent employment data in Australia underscore SMEs’ role in the economy. In 2024, SMEs (defined as firms with up to 199 employees) accounted for 95% of employment in agriculture, forestry and fishing; 89% in rental, hiring and real estate services; and 87% in other services; 86% in construction; 62% in manufacturing.3
A 2023 national survey4 of around 400 small businesses with 1-50 employees across Australia, published by “Energy Consumers Australia” (an independent organisation created by the Council of Australian Governments), investigated the concerns of small business owners regarding reducing their energy consumption. Most business owners recognised the importance of reducing energy use (in particular to manage costs), but many were unsure how to do so. Additionally, over 58% were uncertain about the potential for changes in reducing the energy bill. Despite growing concern about energy costs, just over half of SMEs (53%) sought relevant information, while nearly a third (31%) took no action to reduce energy in the past year.
Most common measures undertaken were rather low-cost and required little effort such as installation of lower energy lightbulbs (47%) or adjustment of temperature settings (44%). Although only 5% of small business energy consumers had undertaken an energy audit, around 60% were interested in receiving a breakdown on main emission sources of their business and in reviewing how each component contributes to energy bills. Around 7% of businesses had applied for a government grant to improve their energy system. Nevertheless, 60% of SMEs reported that government financial incentives would encourage them to reduce their energy use. Overall, the results point to large untapped potential for well-designed support tools and financial incentives to enable SMEs to reduce energy use and GHG emissions.
Safeguard mechanism (for large industrial emitters)
The safeguard mechanism is Australia’s main regulatory mechanism for industrial decarbonisation that follows the goal to achieve net zero by 2050. The entities that need to comply and consequently follow emission reduction requirements are large industrial facilities, emitting over 100 000 tonnes CO2-e per year. 218 facilities were covered under the mechanism in the reporting year 2022-23.5 The safeguard mechanism leverages the National Greenhouse and Energy Reporting (NGER) Scheme6 single national framework for reporting company information about GHG emissions, energy production and consumption; all safeguard facilities are mandated to report under the NGER Scheme which applies to facilities emitting over over 25 000 tonnes or more of CO2-e.
The safeguard mechanism works as follows: Each facility is given an individual baseline (indicating levels of emissions) which decline every financial year. Each year net emissions are compared against those baselines to determine if offsets (i.e., buying credit units) are required. When a firm exceeds its baselines, it is mandated to offset its excess emissions, whereas those that remain below their baselines receive credit units that can be traded. SMEs do not fall within the scope of the reporting requirements and the associated mechanism and are therefore only indirectly affected. These indirect impacts on SMEs may arise through higher input prices (e.g., for energy, input materials), as well as through new opportunities to supply low-carbon inputs, monitoring equipment, and related services.
General guidance and emission calculators
A variety of resources are available to support Australian businesses in monitoring their GHG emissions on the federal and state level. In particular, Climate Active7, the Australian government’s flagship programme for voluntary climate action, and City Switch (city-level programme), which focuses on emissions from buildings (see the next section), offer a variety of tools to assist firms. These include guidance documents and carbon calculation tools accessible to businesses of all sizes, including SMEs.
Although participation is voluntary, SMEs may choose to align with the standards. The Climate Active Carbon Neutral Standard for Organisations, for example, provides a voluntary framework for managing GHG emissions. The associated guidance helps businesses collect activity data, calculate their overall carbon footprint and distinguish between different emission scopes. It also helps them apply emissions factors and account for the use of renewable energy (Commonwealth of Australia, 2022[5]).
Private sector tools for small businesses
As banks and large firms in Australia increasingly encourage smaller suppliers to track and disclose emissions, major Australian banks have responded by introducing sustainability platforms and tools tailored for SMEs. For example, in 2023 Commonwealth Bank of Australia launched a Sustainability Action Tool8 that helps small firms identify sustainable practices to cut costs and reduce emissions. The tool integrates features like energy analytics (through an app developed with an Australian start-up) to translate usage data into actionable steps for saving energy and reducing emissions.
Climate active
The government established the “Climate Active” programme to encourage voluntary climate action, including among SMEs.9 This flagship programme, managed by the Department of Climate Change, Energy, the Environment and Water (DCCEEW), provides a certification for categories of buildings, events, organisations, precincts, products and services that achieve carbon neutrality based on agreed emissions boundaries for a specific certification type. Certification is based on the Climate Active Carbon Neutral Standard adapted from the international Greenhouse Gas Protocol. The overarching goal is to increase the number of Australian businesses and organisations that measure and develop strategies to reduce emissions (Department of Climate Change, Energy, the Environment and Water, 2023[6]).
The process of certification involves independent review processes, such as third-party audits, annual reporting, and public disclosure of emissions, to ensure carbon-neutral claims are credible. DCCEEW also supports businesses and organisations with standardised carbon accounting materials, including technical guidance, an electricity emissions accounting framework (adapted from the GHG Protocol Scope 2 Guidance), and regularly updated calculation tools and emissions factors. Once certified, businesses can use a trademark to promote their green credentials.
The programme offers a tiered pathway adapted to businesses at different stages of emission monitoring. The “starting out phase” offers guidance and tools and is adapted particularly to SMEs that start their transition journey. The “pending phase” for businesses that entered into an agreement to measure their emissions with DCCEEW have access to the full range of Climate Active tools and calculators and will be listed as an organisation working towards certification on the Climate Active website (Department of Climate Change, Energy, the Environment and Water, 2023[6]). To remove barriers to entry for smaller firms, the programme offers pre-defined emissions boundaries, simplifying the process of determining which emission sources need to be tracked. As of October 2023, Climate Active had reached a total of over 700 certifications, including small businesses, large businesses, local governments, and non-profit organisations.
Government-supported energy efficiency and trainings
The Department of Climate Change, Energy, the Environment and Water published a list of energy efficiency training on-the-job learning, government workshops and training programmes of professionals and industry associations10. The list includes professional bodies and industry associations that provide relevant skills training for different target groups across multiple sectors. Examples include the Energy Efficiency Council’s (EEC) training programmes (Australia’s peak body for energy efficiency), as well as the training on Energy Efficiency Skill Sets developed by the Manufacturing Industry Skills Alliance, or state-funded pilot initiatives to bridge green skills gaps such as the NSW Skills for Net Zero Initiative (Box 1).
The NSW Skills for Net Zero initiative, state-funded by the NSW government and implemented by CSIRO (Australia’s national science agency), aims to equip businesses with net zero workforce and skills by connecting them with tertiary (higher education) student interns working on decarbonisation projects. Launched in 2025 with a budget of AUD 1 million (around USD 671 000), it aims to address skills gaps and labour shortages in the transition to a low-carbon economy by offering businesses access to talented students, providing end-to-end recruitment and placement support. Participating businesses and students are also supported through a wage subsidy of up to AUD 2 500 (around USD 1 677) upon successful completion of an internship. By supporting student placements, the programme helps students to gain practical experience and establish career pathways in net zero-related fields. This strengthens the capability of the workforce in the transition to a net zero economy in NSW by 2050.
City Switch Programme
The City Switch11 programme is a flagship decarbonisation initiative for office-based businesses in Australia. Initially funded by the cities of Sydney, Melbourne, North Sydney, Port Phillip, Yarra and Ballarat, the programme was established in 2005. While originally focused on improving energy efficiency in office buildings, City Switch expanded to support businesses throughout their entire journey to achieving net zero emissions. The programme is backed by the National Australian Built Environment Rating System (NABERS). It provides participating businesses with a wide range of free resources, including guidance, tools and support for measuring and reducing emissions. According to City Switch’s own statistics, its members occupy approximately 10% of all office floor space in Australia, and around 85% of participating organisations measure their scope 1 and scope 2 emissions.
“Small Business Energy Incentive” (tax credit)
The Small Business Energy Incentive, administered through the Australian Taxation Office (ATO), provided small and medium firms with a tax deduction for eligible costs of investments in energy efficiency and electrification. When announced, the Incentive was estimated to reduce tax receipts overall by AUD 310 million (=around USD 208 million). The incentive applied to eligible expenditure between 1 July 2023 until 30 June 2024. The goal of the programme was to support business with an annual turnover of less than AUD 50 million (=around USD 32.5 million) to improve energy efficiency and support the more efficient use of energy.12 Investments of up to AUD 100 000 (= around USD 65 000) were eligible for the incentive of a 20% bonus of tax deduction, with a maximum bonus of AUD 20 000 (= around USD 13 000).
Eligible investments for the bonus included the purchase of electrification equipment, such as replacing a gas heater with a reverse-cycle air conditioner or substituting a diesel engine with an electric motor, along with upgrades to energy-efficient appliances, for example modern refrigeration systems. The incentive also covered time-shifting devices that allow electrical appliances to operate during off-peak periods, as well as the installation of a Virtual Power Plant-enabled battery system, which enables remote co-ordination of batteries and the sharing of excess (solar) energy with the grid during periods of peak demand.
Energy Efficiency Grants for Small and Medium Sized Enterprises
The Energy Efficiency Grants for Small and Medium Sized Enterprises13, run by the Department of Climate Change, Energy, the Environment and Water, is a grant initiative designed to help SMEs lower energy use and improve energy efficiency, while also helping to reduce exposure to energy price fluctuations. It offers grants of AUD 10 000 to 25 000 (= around USD 6 708 to 16 772) to SMEs. AUD 56.7 million (=around USD 38 million) was so far distributed across two rounds in 2023 and 2024, to support activities such as upgrading or replacing inefficient equipment (e.g., more efficient refrigeration or switching from gas to electric), improving space and water heating, conducting energy audits, and installing energy monitoring systems.
In terms of uptake, funding round 1 (open March to April 2023) supported 677 SMEs with AUD 15.5 million (= USD 10.4 million) in grants, and funding round 2 (open February to April 2024) supported 1 752 SMEs with AUD 41.2 million (=USD 28 million). As of February 2025, the programme is closed to new applications.
The Clean Energy Finance Corporation (CEFC)’s green loan programmes for investments in energy efficiency, renewables and recycling facilities
The Clean Energy Finance Corporation (CEFC), established in 2012 by the Clean Energy Finance Corporation Act 2012, is Australia’s government-owned green investment bank that provides preferential loans to support SME investments into energy efficiency and renewable energies.
The CEFC runs several “discounted asset finance programmes” delivered through co-financiers (usually commercial banks but also non-bank lenders), which aim to make green finance more accessible to a wide range of customers, including small businesses across Australia. These programmes can finance up to 100% of eligible costs for equipment and upgrades, ranging from small-scale rooftop solar and battery storage to industrial and agricultural machinery, improved building insulation, heating and cooling systems, energy demand-management technologies, recycling equipment, and low-emissions or electric vehicles.
While the CEFC supports a wide range of programmes14, some are specifically targeted at SMEs. One example is the “MetroEco Green Loans”15 programme, which helps SMEs improve energy efficiency by providing discounted loans for clean energy technologies, such as the uptake of EVs but also, solar PV and batteries and other equipment. These loans are offered by Metro, an independent non-bank lender specialising in vehicle and equipment finance for businesses and consumers. In 2024, the CEFC committed AUD 100 million (around USD 66 000 million) to the AUD 500 million MetroEco green securitisation warehouse. Through this arrangement, the CEFC supports SME decarbonisation by subsidising half of the interest rate discount, with the other half provided by Metro Finance, resulting in a one-percentage-point discount on standard loan rates for eligible green investments.
Moreover, as part of the “ANZ Energy Efficient Asset Finance Programme”, the CEFC plans to invest up to AUD 200 million (around USD 134 million) alongside ANZ, a commercial bank, to offer discounted clean energy finance to ANZ business customers. Loans of up to AUD 5 million (=USD 3.4 million) are discounted by 0.5%, extending the existing co-financing programmes.16
Another programme that targets investments in manufacturing, transport and recycling is the “NAB Green Finance for Vehicles and Equipment program”17. This CEFC-backed programme run by the National Australia Bank (NAB) provides businesses with loans ranging from AUD 10 000 to AUD 5 million (=USD 7 000 to 3.5 million) while offering a 0.5% interest rate discount on investments in manufacturing equipment, production of net-emission vehicles and recycling facilities.
Beyond the above-mentioned programmes that cater to a broad range of SMEs and cover an extensive list of eligible equipment18 (e.g., EVs, solar panels, heat pumps and manufacturing equipment), some initiatives are more targeted, focusing on SMEs operating in sectors characterised by diffuse and multiple emission sources such as agriculture (Box 2). In this context, an additional programme that is part of the AUD 300 million (=USD 211 million) investment commitment from the CEFC to NAB is the “NAB Agribusiness Emissions Reduction Incentive Program” aimed at investment into technologies for on-farm emission reduction19.
The “Towards Net Zero Agriculture Pathfinder”, launched in early 2025, is a guide for agri-businesses, developed by CSIRO (Australia’s national science agency) for the CEFC, as part of its “Towards Net Zero (TNZ) Agriculture Strategy”. Its goal is to provide farmers with access to discounted finance to support plans to implement low emissions farming activities. In the tool’s development phase, Pathfinder activities were selected to offer clear incentives for farmers and scientifically demonstrated emissions-reduction impacts.
To guide agri-SMEs to decarbonisation action, the pathfinder follows a three-step approach:
1) Establishing a baseline provides a reference point against which emissions reductions relative to business-as-usual can be measured. The guidance supports businesses in identifying emissions-reduction strategies tailored to their specific operations (and main sources of emissions) and enables comparison of performance with peers.
2) The Farm Emissions Reduction Plan (FERP) aims to align activities with business goals. In its first step it provides an initial estimate of emission reduction benefits (in tonnes of CO2e per year) from the planned activities. In its second step, based on the baseline and planned activities, it enables a five-year forecast of emission reduction outcomes and provides a set of monitoring tools. This step focuses on how different activities interact and reinforce one another.
3) On-farm Emissions Reduction Activities that fall into the criteria of the TNZ Agriculture Strategy may be co-financed. This includes investments in energy use, agronomic and livestock footprints, or land use change (for example: renewable energy improvements, lower emission fertilisers, reduced methane from livestock through improved feed quality, soil carbon storage).
Grants to support investment and innovation in renewable technologies of the Australian Renewable Energy Agency (ARENA)
To increase the uptake of renewable energy across business, the Australian Renewable Energy Agency (ARENA) offers a range of grants20 to businesses, in particular for the R&D projects in the pre-commercial innovation stage. ARENA is an Australian Government statutory authority that supports the transition to net-zero emissions. Past funding rounds have supported, for example, R&D to address end-of-life challenges for solar photovoltaic panels and to reduce their costs (AUD 15 million/ USD 10 million), as well as the development of a potential renewable energy export supply chain centred on hydrogen and related carrier materials (over AUD 22 million/ around USD 15 million).
The Clean Energy Finance Corporation (CEFC) Growth Capital Investments
The CEFC Growth capital investments in the form of venture capital and private equity target high-growth businesses focused on decarbonisation. The investments range from AUD 5 million to 30 million with flexible hold periods from three to ten years. Alongside its direct investments, the CEFC also invests indirectly through funds managed by private equity, venture capital, and other specialist fund managers, helping to crowd in additional capital from private investors. Investments fall into the four priority areas energy, transport, industry and resources and natural capital.21
Powering the regions fund
Some Australian initiatives also operate at the subnational (state) level through federal funding22. One example is the Powering the Regions Fund, part of the government’s “Powering Australia plan”23 , announced in 2023, which channelled AUD 1.9 billion (=USD 1.3 billion) in federal funding to support the decarbonisation of existing industries and the development of new clean energy industries across Australian states and territories. The initiative includes dedicated funding streams, such as the Safeguard Transformation (for large industrial firms affected by the “Safeguard Mechanism”, Industrial Transformation, and Critical Inputs to Clean Energy Industries streams) to finance emissions-reduction projects in sectors including manufacturing, resources, and energy. The funding streams are not specifically targeted at SMEs, but smaller firms may benefit from the diffusion of clean tech across the economy. Other state-level programmes target more directly SMEs and entrepreneurs, e.g., through investment support for energy efficiency or uptake of renewables or support for R&D projects (Box 3).
Net Zero Manufacturing Initiative
In 2024, AUD 275 million (=USD 184 million) was allocated across three funding programmes under the Net Zero Manufacturing Initiative:
Clean Technology Innovation,
Low Carbon Product Manufacturing,
Renewable Manufacturing.
While grant support under the programme is open to firms of all sizes, many recipients are SMEs. For example, under the “Clean Technology Innovation” stream, the small firm Halocell Energy Ltd received AUD 250 000 for a one-year study project to explore low-cost, high-efficiency perovskite solar modules and tandem stacks. The company focuses on efficient, environmentally friendly energy storage solutions for renewable energy and electric vehicles.
Under the Low Carbon Product Manufacturing stream, funding supports the expansion of local manufacturing capacity for low-carbon products and materials. Under the Renewable Manufacturing programme, businesses can establish new or expanded commercial-scale facilities in New South Wales to manufacture components for grid-scale renewable energy generation, storage, and transmission.
Clean technology innovation grants and offers
In the area of innovation, the Government of New South Wales has established a range of resources and, since 2023, invested AUD 43.8 million in 32 projects.
The Clean technology research and development grants programme funded by the NSW Environmental Trust, supports early-stage clean technology R&D projects that strengthen New South Wales’ innovation ecosystem. In practice, it funds projects at Technology Readiness Levels 2 to 6 that develop innovative solutions for decarbonising high-emitting or hard-to-abate industries and promote cross-sectoral collaboration and knowledge sharing.
NSW Decarbonisation Innovation Hub
The funding programme is accompanied by advisory services and networking offered by the NSW Decarbonisation Innovation Hub, established in June 2022, and its three support networks (Land and Primary Industries, Electrification and Energy Systems, Powerfuels including Hydrogen). The Hub aims to bridge the gap between research and commercialisation via partnerships and projects between industry, researchers and government.
Some of the Hub’s initiatives specially target SMEs, such as the recent 2025 Innovate P2X co-funding initiative in collaboration with the Powerfuels Including Hydrogen Network (PFHN). The initiative provides SMEs (under 200 employees), university spinouts and startup access to research infrastructure, resources and knowledge for commercialisation of Power-to-X technologies (technologies that turn electricity into carbon-neutral synthetic fuels). The scheme is administered by the University of New South Wales (UNSW) and provides AUD 50 000 in funding that must be spent with approved network partners. The leading SME applicant is required to match this amount with an equivalent level of expenditure.
In Australia, sustainability reporting requirements gained momentum in recent years, particularly following the announcement of the new Sustainable Finance Strategy in 2022. This strategy included a Sustainable Finance Roadmap, which was released in June 2024 and sets out the vision for implementing key sustainable finance reforms (Commonwealth of Australia, 2024[7]).
At its core of the roadmap are the implementation of mandatory climate-related financial disclosure requirements for large businesses and financial institutions, effective from January 2025, as well as the development of an Australian sustainable finance taxonomy. Under the regulation large firms need to comply with the new Australian reporting standard (ASRS) AASB S2.24 Initially, SMEs are not directly obligated by these disclosure rules. Nevertheless, the regulation’s impact is expected to cascade down to smaller firms, as large firms are already mandated to report on their scope 3 emissions in their supply chain.25 Also medium-sized firms with more than 100 employees and over AUD 50 million (USD 33.5 million) in revenues are expected to fall under the reporting threshold starting in 2027.
SMEs that supply larger firms belonging to groups subject to reporting requirements are encouraged to start preparing for the disclosure of Scope 1 and 2 emissions. This is because these emissions represent the Scope 3 emissions, which larger firms will be required to report on. Evidence suggests that Tier 1 companies (usually large buyers) are moving away from spend-based industry average data towards more supplier specific data (CitySwitch, 2025[8]). For SMEs, the disclosure of more specific data may require considering extra risk protocols when sharing data, including non-disclosure requirements. This is because it would be possible to use the intensity metric published by an SME supplier to reverse-calculate the supplier’s total revenue (Box 4).
General guidance for service-based suppliers
Follow the guidance on emission reporting for SMEs of the CitySwitch programme (see section on awareness raising and training), service-based suppliers may need to report on their scope 1 and 2 emissions data through either:
an average intensity metric (measured in tCO2-e per AUD revenue): Buyers can multiply their annual spend with the supplier by this intensity metric.
Calculation of total CO2-e attributed to each buyer (calculated before sharing the data).
If a SME supplier disclosed its emissions intensity metric together with its scope 1 and 2 emissions, it would be possible to infer its total revenue. As such disclosure could have implications for the SME supplier, such as weakening its negotiating position with large buyers, guidance suggests considering risk protocols when sharing data.
Life cycle assessments (LCAs) of products
Suppliers selling physical goods may need to conduct life cycle assessment (cradle-to-gate) and report:
tCO2-e per unit of goods sold or the tCO2-e per AUD of goods sold.
Additional guidance on the methods for calculating GHG emissions for each of the 15 categories of scope 3 emissions (such as purchased goods and services, transportation and distribution, and use of sold products) under the GHG Protocol is available on the GHG Protocol website (link below).
Source: CitySwitch (2025[8]), Mandatory Climate Reporting Guide, https://www.datocms-assets.com/96396/1754435960-38502d-1.pdf , https://ghgprotocol.org/scope-3-calculation-guidance-2 .
Following stakeholder interviews26 the approach to SME green lending of the Clean Energy Finance Corporation (CEFC) reflects a partnership model with commercial lenders (including non-bank lenders) comparable to those of promotional banks such as Germany’s KfW or France’s Bpifrance. Rather than competing with commercial credit products, the CEFC approach seeks to mainstream green finance through close collaboration with financial intermediaries which distribute the credit products in the market. To encourage uptake of green finance at scale, the CEFC encourages participating commercial lenders to make a “co-contribution” that translates into preferential terms for borrowers. This is typically delivered through an interest-rate discount (through CEFC investment) of around 0.25 to 0.40 percentage points on eligible green loans that is matched with an additional interest rate discount of the commercial lender.27
A key benefit of the close collaboration with commercial lenders is access to established distribution channels including the operational capacity to service loans at smaller ticket sizes, which is particularly relevant for SMEs. Banks also bring strong outreach capabilities. In this context, the CEFC typically agrees on the go-to-market approach (i.e., marketing plans and outreach strategies) with the bank and collaborates on developing case studies that demonstrate practical benefits. Showcasing tangible benefits through case studies and business peer-learning is important given two barriers identified in the interviews: SMEs often prioritise revenue growth over cost reduction and are more likely to follow proven examples than to lead adoption of new clean technologies.
The interview highlighted the importance of collaboration with specialist knowledge partners in the design and impact monitoring in selected programmes. This may be particularly useful for programmes targeting hard-to-abate sectors such as heavy transport and agriculture (e.g., the “Towards Net Zero Agriculture Pathfinder” developed in collaboration with CSIRO, Australia’s national science agency; see Box 2). For example, GHG emission reduction through the purchase of electric vehicles can be verified using relatively straightforward evidence (such as registration details or invoices). On the other hand, initiatives regarding on-farm emissions reductions are inherently more complex, as they require the establishment of an emissions baseline, a structured reduction plan, and monitoring arrangements that credibly link finance to emissions reductions.
Finally, in Australia, the recent introduction of the climate-related disclosure regime (see the section on sustainability reporting requirements) was identified as an important driver to encourage commercial lenders to increase the supply of SME green debt finance products. The emerging regulatory regime provides banks with incentives to demonstrate progress in decarbonising their products and portfolios in Australia’s competitive lending market.
References
[8] CitySwitch (2025), Mandatory Climate Reporting Guide, https://www.datocms-assets.com/96396/1754435960-38502d-1.pdf.
[1] Commonwealth of Australia (2025), Australia’s Net Zero Plan, https://www.dcceew.gov.au/sites/default/files/documents/net-zero-report.pdf.
[2] Commonwealth of Australia (2024), 2024 Annual Progress Report, https://www.climatechangeauthority.gov.au/sites/default/files/documents/2024-11/2024AnnualProgressReport.pdf.
[7] Commonwealth of Australia (2024), Sustainable Finance Roadmap, https://treasury.gov.au/sites/default/files/2024-06/p2024-536290.pdf.
[5] Commonwealth of Australia (2022), Carbon Neutral Organisations - Climate Active Carbon Neutral Standard for Organisations, https://www.climateactive.org.au/sites/default/files/2023-04/Standards_Organisation.pdf.
[6] Department of Climate Change, Energy, the Environment and Water (2023), Climate Active Program Direction Consultation 2023, https://consult.dcceew.gov.au/climate-active-program-direction-consultation-2023.
[4] Fawcett, T. and S. Hampton (2020), “Why & how energy efficiency policy should address SMEs”, Energy Policy, Vol. 140, p. 111337, https://doi.org/10.1016/j.enpol.2020.111337.
[3] OECD (2025), Environment at a Glance: Australia, https://www.oecd.org/en/publications/environment-at-a-glance-country-notes_59ce6fe6-en/australia_179d7be0-en.html.
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Note by the Republic of Türkiye
The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union
The Republic of Cyprus is recognised by all members of the United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
© OECD 2026
Attribution 4.0 International (CC BY 4.0)
This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/).
Attribution – you must cite the work.
Translations – you must cite the original work, identify changes to the original and add the following text: In the event of any discrepancy between the original work and the translation, only the text of original work should be considered valid.
Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries.
Third-party material – the licence does not apply to third-party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement.
You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work.
Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one.
← 1. For further information on energy statistics, see Australia’s country page on the IEA website: https://www.iea.org/countries/australia/ .
← 2. For further information, see: https://www.dcceew.gov.au/sites/default/files/documents/quarterly-update-australias-national-greenhouse-gas-inventory-september-2025.pdf .
← 3. Based on ABS Australian Industry, Table 5, May 2025 and ASBFEO calculations, private sector industry; data can be found here: https://www.asbfeo.gov.au/small-business-data-portal/contribution-australian-employment .
← 4. For full survey findings and information about the sample are available, see: https://energyconsumersaustralia.com.au/news/smes-need-better-information-to-have-power-over-their-power#:~:text=The%20research%20shows%20there%20are,would%20be%20interested%20in%20this .
← 5. For further information, see: https://cer.gov.au/schemes/safeguard-mechanism/safeguard-baselines .
← 6. For further information, see: https://cer.gov.au/schemes/national-greenhouse-and-energy-reporting-scheme/assess-your-obligations .
← 7. For an overview of tools and ressources of Climate Active, see: https://www.climateactive.org.au/be-climate-active/tools-and-resources .
← 8. For further information, see: https://www.commbank.com.au/sustainability/sustainability-action-tool.html.
← 9. For further information, see: https://www.dcceew.gov.au/climate-change/climate-active#:~:text=To%20become%20carbon%20neutral%2C%20businesses,and%20organisations .
← 10. For an overview of training offer, see the government’s website: https://www.energy.gov.au/business/energy-efficiency-skills-and-training/energy-efficiency-training .
← 11. For further information on the programme, see: https://cityswitch.net.au/ .
← 12. See more info on the programme: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/small-business-energy-incentive
← 13. For further information on the programme, see the website of the Department of Climate Change, Energy, the Environment and Water: https://www.dcceew.gov.au/energy/programs/energy-efficiency-grants-small-medium-sized-enterprises and SME case studies here: https://www.energy.gov.au/business/case-studies/energy-efficiency-grants-smes-case-studies .
← 14. For an overview of current small business asset finance programmes, see: https://www.cefc.com.au/where-we-invest/investment-focus-areas/asset-finance/ .
← 15. For an overview of the MetroEco Green Loans, see: https://www.cefc.com.au/case-studies/metroeco-loans-drive-clean-energy-savings-for-smes/ .
← 16. For further information on the CEFC and ANZ’s Energy Efficient Asset Finance programme, see : https://www.cefc.com.au/case-studies/anz-program-helps-businesses-join-the-clean-energy-transformation/ ; https://www.cefc.com.au/media/media-release/cefc-and-anz-finance-loan-discounts-to-help-business-reduce-emissions-and-cut-energy-use/ .
← 17. For further information, see: https://www.cefc.com.au/case-studies/nab-lower-cost-loans-drive-clean-energy-opportunities-for-business/ .
← 18. The CECF maintains an extensive list of eligible technologies to determine which types of equipment qualify for investment and what evidence is required to access loans under the various programmes (e.g. tax invoices for equipment and installation costs). This list is regularly updated to incorporate newly emerging technologies.
← 19. For further information, see: https://www.cefc.com.au/case-studies/nab-agribusiness-loans-back-farmers-investing-in-a-more-sustainable-future/ .
← 20. For an overview of current funding opportunities for businesses, see: https://arena.gov.au/funding/ .
← 21. For case studies of CEFC investments, see: https://www.cefc.com.au/where-we-invest/investment-focus-areas/growth-capital/ .
← 22. In Australia, responsibility over environmental policy is shared between the federal government, six states, two territories and over 560 municipalities.
← 23. For further information, see: https://www.dcceew.gov.au/climate-change/action
← 24. This Standard requires the firm to disclose information about climate-related risks and opportunities that are “expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term”. For further information on the standards, see: https://www.anthesisgroup.com/au/insights/asrs-and-aasb-s2-a-guide-to-mandatory-climate-reporting-in-australia/#:~:text=Australia%E2%80%99s%20mandatory%20climate,opportunities%20in%20a%20%E2%80%98Sustainability%20Report%E2%80%99 .
← 25. For me information on expected impact on SMEs, see the Australian Securities and Investments Commission’s (ASIC) release: https://www.asic.gov.au/about-asic/news-centre/articles/climate-reporting-and-greenwashing-what-small-businesses-need-to-know/ .
← 26. For this country note, a representative of Australia’s Clean Energy Finance Corporation was interviewed.
← 27. One example is the latest discount clean energy finance programme of the CEFC and the bank ANZ. The CEFC and the ANZ each contributes 0.25% toward a 0.5% discount on loans of up to AUD 5 million (USD 3.4 million). For further information on the product, see: https://www.cefc.com.au/media/media-release/cefc-and-anz-finance-loan-discounts-to-help-business-reduce-emissions-and-cut-energy-use/ .