The finding was part of a new report looking into ESG reporting by the ASX200, which the ASCI has been assessing for 12 years. It expanded its analysis this year to include safety metrics.
According to ESG reporting by the ASX200, the number of companies that report on ESG matters has improved by 19 per cent over the last five years. More than half of Australia’s largest listed companies are reported to provide in-depth disclosure and assessment of their material ESG risks.
Asset manager Janus Henderson was named and shamed in the report, as one of six companies listed for not completing any ESG reporting for two or more successive years.
However even with the rise in commitments to ESG values, the research found gaps in practices across safety performance, climate-related reporting and workplace fatalities.
The review showed 16 of the 22 reported workplace deaths were contractors, which the ASCI said suggested a disconnect between the safety practices of companies and the standards they require of contractors.
Out of the ASX200 companies, 67 were found to disclose no safety information, including eight that pay executive bonuses based on safety outcomes. ASCI added the lack of information was out of step with investor expectations.
The information on workplace fatalities is collected by state-based agencies and varies by sector, making it difficult for investors to locate.
Louise Davidson, chief executive of ASCI said information about company practices is a critical piece of business intelligence, with investors needing to understand how companies tackle ESG issues to make investment decisions.
“Safety data is material to our members. We are concerned that the lack of transparency about workplace deaths may mask the extent of the tragedy and slow the identification of systemic risks,” Ms Davidson said.
Climate risk and workforce reporting up, but no standards set
The research found the number of companies reporting against the Taskforce on Climate-related Financial Disclosures framework has doubled in 12 months, with a quarter of ASX200 companies now committing to the framework.
Companies were also said to be gaining consciousness of consequence management disclosure, or how an organisation deals with poor behaviour and breaches of conduct standards following the royal commission.
However, comparisons between companies is difficult, ASCI said, given the wide range of climate scenarios used or lack of standardised assessments in employee management and engagement.
Few companies were noted to be disclosing long-term, emissions-reduction targets of net zero emissions by 2050. Most companies are not using a 1.5 degree Celsius scenario, the ASCI reported, and only six companies were seen to.
In workforce and governance reporting, only 21 per cent of executive leadership roles in the ASX200 are held by women and 32 companies still hold all male leadership teams.
More funds hopping onto ASCI Stewardship Code
The ASCI formed a voluntary set of guidelines for investors in 2018, the Australian Asset Owners Stewardship Code, aiming to increase the transparency and accountability of stewardship activities in Australia. NGS Super is the latest fund to sign on for the initiative.
The code provides guidance to asset owners and their approach to stewardship, reflective of size, resourcing, membership and investment policies.
Under the code, signatories are obliged to publish a stewardship statement on the website, detailing how they intend to comply with its principles around disclosure, exercising voting rights, company engagement, financial system advocacy and monitoring of asset managers.
NGS Super chief executive Laura Wright believes the code will protect NGS members, while also enhancing long-term value.
“Promoting sustainable value creation in all companies that NGS Super invests in is of utmost importance, especially in order to give our members the best retirement outcome,” she said.
“We believe we can exercise our ownership rights to further protect and enhance long-term value for members and the approach of the code and its six principles are complementary to the nature, objective and purpose of superannuation.
“For the fund, disclosure is a key focus that allows investors to better understand, evaluate and assess potential risk and return.”
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
