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Australian ESG reporting deemed ‘less transparent’ than global counterparts

By Jessica Penny
3 minute read

A global study has identified the strengths and weaknesses in the ESG reporting of Australia’s largest companies.

The Global ESG Monitor report, which for the first time covers Australia, simultaneously highlighted the top-performing companies across several national stock exchanges and took a deep dive into the aspects of ESG reporting that Australia specifically fell short on.

Amongst the 197 companies assessed across four major stock exchanges — ASX 50, S&P 50 (Asia), S&P 50 (USA) and the EURO STOXX — Endeavour Group was named as the top ASX 50 company for ESG reporting.

It was followed by ANZ and Newcrest Mining, with the pair ranking equal second, while QBE Insurance Group and Woodside Petroleum came in third.

According to the report, Australian companies are typically transparent about their key non-financial risks, their operating environment, and their use of climate-related recommendations and frameworks.

However, they were found to be less clear on indicators for measuring progress, their use of and impacts on nature, and their processes for managing critical sustainability concerns inside the company.

Corporate sustainability specialist at Currie, Mark Paterson, explained, “The biggest differences in transparency between Australian and high-scoring European companies [are that] Europeans provide more information about calculation methods, the monitoring of targets and milestones and their integration into everyday business.”

Furthermore, Australian companies’ reports were judged to be less transparent than those prepared by European companies, and to a lesser extent by their Asian counterparts. Australia was given the same average score as the US: 53 out of a possible 100.

“While global standards set the rules for sustainability reporting, The 2022 Global ESG Monitor: Australia assesses how well these rules are being applied,” Mr Paterson explained.

He noted that the study does not measure the outcomes of corporate ESG efforts, but rather what companies disclose about them.

“Should we be wary of those companies with low scores for transparency? Maybe. At the very least we should be asking, ‘Why are they not disclosing as much as they could be’?” Mr Paterson questioned.

The Global ESG Monitor stated that outcomes are based on a model that analyses transparency in terms of balance, comparability, accuracy, timeliness, reliability and relevance across ESG topics.

“Investors, regulators, workers and customers are demanding greater transparency about how companies are managing the non-financial impacts from and risk to their operations,” Mr Paterson explained.

He hoped that ongoing investigations would “hold companies accountable for their non-financial risks and impacts.”