General
Navigating Australia’s ESP Policy and SESP: How technology helps federal government suppliers meet compliance requirements
Misha Cajic
March 20, 2025
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7
min read
Sustainability regulations are evolving rapidly, and businesses operating in Australia must stay ahead of policies like the Environmentally Sustainable Procurement (ESP) Policy and the Supplier Environmental Sustainability Plan (SESP). These frameworks require companies to integrate sustainability into their procurement decisions, minimise environmental impact, and improve transparency in supply chains.
Meeting these requirements manually can be overwhelming, especially for large organisations with complex supplier networks. This is where technology plays a crucial role. By leveraging automation, data analytics, and AI-driven insights, companies can streamline compliance, track sustainability performance, and make informed procurement decisions.
The ESP Policy aims to ensure that government agencies and businesses prioritise environmentally responsible suppliers. It requires suppliers to document their carbon footprint, implement reduction strategies, and report on sustainability progress.
At the core of this policy is the Supplier Environmental Sustainability Plan (SESP), a mandatory requirement for companies supplying to the Australian Government. The SESP initially applies to construction services from 1 July 2024, with other sectors such as ICT, furniture, and textiles coming into scope from 1 July 2025.
To comply with the SESP, suppliers must provide:
With these stringent requirements, businesses need real-time emissions data, robust tracking systems, and automated reporting tools to ensure compliance.
Advanced digital solutions can simplify compliance with these regulations while also unlocking opportunities for efficiency and emissions reductions. Here’s how technology can help companies navigate these policies effectively:
One of the biggest challenges in sustainable procurement is obtaining accurate emissions data, especially when suppliers cannot provide detailed carbon footprints. Rather than waiting for complete data, businesses need a way to start estimating emissions immediately.
By using AI to match spend and activity data to relevant emission factors, companies can generate instant emissions estimates across their supply chain. This allows them to quickly identify high-emission areas, align with compliance requirements, and begin reduction planning while continuing to improve data quality over time.
While estimates provide a strong starting point, supplier-specific data is crucial for full compliance with the SESP. However, collecting this information manually can be resource-intensive and inefficient.
Technology can make this process seamless by enabling businesses to send digital surveys or data collection requests directly to suppliers. Suppliers can then input their spend or activity data and receive automated emissions calculations — ideally at no cost — creating a more accurate and collaborative dataset for reporting.
Another advantage of digital tools is the ability to model various procurement scenarios and their environmental impacts. Organisations can simulate supplier changes, material substitutions, or logistics adjustments and see how these decisions would influence their overall emissions footprint.
This helps companies choose the most sustainable sourcing strategies that still meet operational and budgetary needs — turning compliance into a strategic opportunity.
To meet SESP requirements, companies need to assess how suppliers are managing their own environmental impact. This includes understanding whether suppliers have set emissions reduction targets, how ambitious those targets are, and how they're tracking progress.
Technology can support this by tracking supplier commitments, flagging those with credible science-based targets, and identifying areas where intervention or support may be needed. This level of insight enables businesses to prioritise suppliers that align with their own climate goals and procurement policies.
The ESP Policy and SESP require businesses to produce transparent, verifiable reports on their emissions and reduction efforts. Compiling this information from multiple systems and formats can be time-consuming and prone to inconsistencies.
Centralised platforms that consolidate all emissions data, supplier inputs, and reduction targets can significantly streamline this process. With audit trails, currency and inflation adjustments, and clearly documented emission factors, businesses can generate accurate, audit-ready reports that meet government compliance standards and reduce the administrative burden of reporting.
Australia’s regulatory landscape is moving rapidly toward mandatory environmental accountability. Companies that don’t adapt risk losing access to government contracts, damaging their brand reputation, or facing penalties for non-compliance.
With the first phase of SESP compliance starting from 1 July 2024, businesses in the construction sector should already be preparing their data and reporting systems. By 1 July 2025, other industries such as ICT, furniture, and textiles will face the same requirements.
Technology offers a practical and efficient way to manage this shift — reducing emissions, improving supplier collaboration, and enabling smarter, data-driven procurement decisions.
Avarni helps businesses automate emissions estimates, engage suppliers, track reduction targets, and generate audit-ready reports — all in one platform. Whether you're just starting your ESP Policy compliance journey or looking to streamline your SESP reporting, Avarni makes it faster and easier.
Learn more at avarni.co/esp-policy-sesp.
