April 2025

Business Radar 2025 Understanding the businesses that drive Australia's economy

The Business Radar report canvasses the trends, challenges and opportunities experienced by Australia’s middle market businesses. Independently commissioned, our most recent survey captured the sentiment of 140 owners and leaders across a range of growth stages, states and industries.

Here, you’ll read how business leaders feel about the current and future success of their businesses and what that could indicate for Australia’s economy.

Key findings

Stable middle market confidence is requiring more of a balancing act – higher costs and stubborn inflation are offset by increased demand and tech-driven efficiencies.
Awareness of mandatory climate reporting is rising but many leaders are still unclear on what it means for their business.
There seems to be a gap between the perception and reality of the time and effort required to comply with mandatory climate reporting.
Australia’s middle market could be underestimating the tangible financial benefits of implementing ESG initiatives.

Read on to learn how you can proactively address these challenges and ensure your business continues to thrive or access a PDF version here.

April 2025

Business confidence

Steady confidence may be masking huge efforts to balance cost pressures against increasing demand and tech advancements

Business confidence levels haven’t notably changed in the last year – it seems to be ‘steady as she goes’ for most middle market business leaders.

That’s consistent across businesses of all sizes and with leaders of different ages.

The exception was in Queensland where middle market leaders are nearly 13% more confident in the future success of their business than their counterparts in other states.

Nerves around global economy

Confidence in the 12-month growth prospects of the global economy tells a different story.

Sitting at 7.15 in our Business Radar report in July 2024 confidence has dropped almost half a point to 6.73.

This shift likely highlights the stirrings of something like unease surrounding recent geopolitical manoeuvrings: power jostling between China, Russia and the US, President Trump’s raft of tariffs and general unpredictability.

These events could reinforce the need for Australian exporters to adequately diversify geographic markets where it makes sense to do so.

Drivers for and threats to business confidence

We again asked our respondents for their top three external factors driving business confidence.

These haven’t changed since the previous survey, but each has fallen slightly, with changes in government legislation rising to take the fourth spot, an increase of 8%.

When asked about the top three external factors negatively impacting their business confidence, our decision-makers had their eye on the bottom line. Inflation, increased operating and labour costs and changing interest rates hold steady in the top spots since our previous survey. However, all have now eased slightly.

Business owners perfect their balancing act

Confidence is not simply impacted by external factors but has been shored up by careful juggling by decision-makers.

While inflation and operating costs are applying pressure, businesses are managing to keep their offering relevant and pivot where necessary to meet customer requirements and boost overall demand.

With the chance of more global turmoil in the near future, it will be interesting to see how well Australia’s middle market maintains its confidence equilibrium.

April 2025

Mandatory climate reporting and ESG

Ready or not, middle market businesses are navigating a complex landscape

Who is impacted?

The mandatory climate reporting legislation requires that all companies subject to mandatory climate-related financial disclosures are phased in three groups, over a four-year period, based on size or level of emissions, as outlined in the table below.

The reporting regime makes climate reporting mandatory for all entities currently required to issue financial reports under Part 2M of the Corporations Act 2001 (Act) – including listed and unlisted companies, financial institutions, registerable superannuation entities and registered investment schemes.

Companies that are exempt from lodging financial reports under Chapter 2M of the the Act don’t have to make the disclosures but may choose to do so.

Awareness? Yes. Clarity? No.

Our respondents showed strong awareness of the incoming requirements, but many remain unclear on what it will actually mean for their businesses. Six in 10 say they have some level of familiarity with the new requirements, and more than half feel confident that they know what needs to happen to reach compliance. However, 75% say they’re not at all prepared or only somewhat prepared for mandatory climate reporting, despite the fast-approaching deadlines.

While some requirements are familiar, greenhouse gas emissions accounting may be the most challenging and novel requirement, particularly for indirect Scope 3 emissions outside of an organisation’s direct control.

Extra work or business benefit?

The middle market’s slower progress towards compliance could be linked to the perceived lack of value that the requirements add to their businesses. It’s clear that for many businesses, the reporting requirements are seen as an administrative burden.

Many middle market businesses are not likely to be caught in the reporting regime, unless required as part of the supply chain emissions reporting.

What is ESG?

ESG refers to Environmental, Social and Governance and is a framework that considers a company’s sustainability impact, and how it manages risks and opportunities in a changing world.

Turn the negative into a positive

Effective governance and strategic planning are crucial in meeting the new ESG and mandatory climate reporting requirements. By integrating these reporting requirements into the company’s governance framework, businesses can make sure that they are not only compliant but also strategically positioned to benefit from these regulations. This involves setting clear objectives, allocating resources efficiently, and continuously monitoring progress to meet the reporting standards.

Meet our middle market businesses

This report defines middle market businesses as typically employing 20–200 people with annual revenue of $2–$500 million. While their operating models, sizes and industries vary widely, these businesses can be categorised into four lifecycle stages.

A range of business structures: Private, Public and Not-for-profit