The overall reporting of sustainability practices has improved on the ASX200, but some Australian companies are falling behind, says the Australian Council of Superannuation Investors (ACSI).
In the foreword of the 2018 Sustainability Report, ACSI chief executive Louise Davidson argued that corporate reporting was an “important opportunity” to build rapport with investors who are “highly attuned to poor or missing information”.
“Done well, [corporate reporting] enables shareholders to make informed investment decisions and the community to judge whether its confidence is well-placed or misplaced,” Ms Davidson said.
“Unfortunately, for too many companies, it is a missed opportunity. Yet again, ACSI has identified large listed companies who provide very little or no reporting on sustainability issues.”
According to the report, 35 companies outperformed others in regards to their sustainability disclosure over the last four years.
Ms Davidson revealed that there were indeed some “promising signs of improvement in sustainability reporting,” such as the 32 ASX200 companies that had adopted or were considering adopting the new global standard developed by the Taskforce on Climate-related Financial Disclosures (TCFD).
This TCFD framework seemed to be emerging as the “‘gold standard’ for climate-related disclosure,” the report said.
Ms Davidson commented: “Although that is only a handful of companies so far, it signals that climate risks are increasingly being considered as part of corporate strategy.”
However, nine companies were outlined as “laggards”, meaning these ASX companies had not reported its sustainability disclosure reporting in the last two years or more.
A further 11 firms on the ASX200 were also considered ‘No Reporters’, and ACSI said it had written to these companies “asking for a commitment to improve disclosures”.
“While sustainability disclosure has improved over the past decade, and climate-related disclosure took a step up in 2017, there is still much further to go,” the report said.
“We will continue to encourage companies to improve their sustainability reporting to ensure that ESG risks and opportunities are integrated into business strategy so that long-term value creation is enhanced.”
Ms Davidson said in her foreword that she hoped the ‘laggard’ ASX200 companies understood there was an opportunity to improve.
“After all, disclosure of sustainability risks is an important tool for assessing long-term value creation and protection – not just for investors and the community, but for companies too,” she said.