Carbon reporting is divided into three scopes. Here is what they mean for your SME — and why Scope 3 is both the most important and the hardest to calculate without automation.
Scope 1 — Direct Emissions
Emissions from sources you own or control
Fuel burned in company vehicles, gas boilers, diesel generators, and refrigerant leaks from your own equipment. You have direct control over these emissions.
Scope 2 — Purchased Energy
Indirect emissions from the electricity you buy
Electricity bills. The emission factor depends on your state grid mix — Queensland has a higher intensity than Tasmania due to the different energy generation sources. QuantS2 applies state-specific NGA factors automatically.
Scope 3 — Value Chain
All other indirect emissions across your value chain
Business travel, freight, purchased goods and services, waste. For most businesses, Scope 3 accounts for over 70% of total emissions. It is the most difficult scope to calculate — but QuantS2 automates it from your existing financial spend data.
Under AASB S2, large Australian corporations must disclose their Scope 3 emissions — which includes the emissions of their entire supply chain. This means they will request emissions data from their suppliers. If you cannot provide it, you risk being removed from their approved supplier list.
Historically, calculating Scope 3 required complex spreadsheets, supplier surveys, and months of consultant engagement. QuantS2's AI automates this by analysing your existing financial spend data — instantly categorising expenses into carbon impact without manual data entry.
The GHG Protocol defines 15 Scope 3 categories. QuantS2 automatically captures the upstream categories most relevant to Australian SMEs from your Xero transactions:
Category 1 — Purchased goods & services
Every supplier invoice
Category 3 — Fuel & energy-related activities
Upstream extraction of fuels you use
Category 4 — Upstream transportation & freight
Courier, road freight, shipping
Category 5 — Waste generated in operations
Landfill, skip bins, recycling
Category 6 — Business travel
Flights, accommodation, taxis
Connect Xero
Authorise QuantS2 to read your accounts payable and expense transactions via secure OAuth 2.0. No credentials stored — only revocable access tokens.
AI classifies every transaction
Each line item is matched to the correct NGA emission category. "Toll Group invoice $3,200" becomes Scope 3 Category 4 — Freight.
Review flagged items
Low-confidence transactions appear in your Review Queue. Approve or reassign in one click — full audit trail maintained.
Export your AASB S2 report
A PDF with your Scope 1, 2, and 3 breakdown — ready to send to your corporate client, formatted to AASB S2 requirements.