ESG disclosures missing the mark

ESG disclosures missing the mark

Current Australian environment, society and governance (ESG) reporting practices “simply aren’t compliant and are coming up short”, according to Company Matters.

Company Matters director Janine Rolfe said the boards of several ASX-listed companies, especially newly listed entities, are “in the dark” about their disclosure obligations as outlined by the ASX Corporate Governance Council when it comes to ESG risks.

Ms Rolfe’s comments are based on a recent KPMG report that looked at corporate adoption of the council’s 2014 recommendations, particularly recommendation 7.4 – that a listed entity should disclose any material exposure to ESG risk, and if it does, how it “manages or intends to manage those risks”.

KPMG found that there was “considerable room for improvement in the manner in which entities chose to adopt recommendation 7.4”.

There were “significant differences” in the interpretation of risk, and many companies referred to financial risks outlined in annual reports instead of directly disclosing ESG risks, the report said.

Ms Rolfe stated that even when such disclosures are made, the level of detail is lacking.

“Even if economic, environmental and social sustainability risks are properly disclosed, many disclosures just stop there and don’t proceed to discuss how those risks are managed, or are intended to be managed.”

According to KPMG’s data, only 32 per cent of the S&P/ASX 200 have adopted recommendation 7.4.

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ESG disclosures missing the mark
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