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Climate targets sweep across ASX as investors demand disclosure

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There has been a surge in leading ASX companies adopting net-zero emissions commitments as investors have demanded information around climate risk, according to a new report.

The Australian Council of Superannuation Investors (ACSI) has published the finding in its annual benchmark analysis of disclosures by ASX 200 companies, which has looked at entities’ corporate reporting up to 31 March. 

The analysis has indicated that the Task Force on Climate-related Financial Disclosures (TCFD) framework, first rolled out in 2017, has now become the most common benchmark for companies’ reporting in high-risk sectors. 

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The ACSI found a five-time uplift on TCFD adoption by ASX 200 entities over the course of two years, to a total of 60 companies and a further 14 committed during reporting season. More than half (56 per cent) of higher-risk companies were now seen to report against the framework.

Meanwhile 18 companies had set net-zero aspirations, with more pledges expected to come in reporting for the 2020 financial year. 

ACSI reported that boards and management are responding to investors calls for discussion around measuring and managing climate risk and opportunities. 

The body’s chief executive, Louise Davidson, said climate change is one of the greatest challenges for its members, as they integrate its risks into their investment strategies.

“The uplift of net-zero and other carbon reduction commitments in the ASX200 demonstrates that this is fast becoming the new normal for leading companies,” she said.

“Climate risks are deeply embedded in the financial system and have impact on all sectors and asset classes. Investors require detailed disclosure of climate-related risks to adequately understand their investment exposure and consider the impacts of transition and physical risks.”

In financial year 2019, companies that had adopted science-based climate targets included Origin Energy, Dexus, SkyCity Entertainment, Fletcher Building, QBE Insurance, Insurance Australia Group and Suncorp. 

Ms Davidson said while many risk companies had provided good disclosure, others were still yet to follow. 

“Disclosure of risks is only the first step,” she said.

“Companies must reflect on how climate change will impact them over the long-term and how they intend to manage that exposure. Investors want to understand how companies are stress-testing their businesses and how this is informing company strategy and actions, over the short and medium-term to meet the Paris goals.”

 

 

Climate targets sweep across ASX as investors demand disclosure
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Sarah Simpkins

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].

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