New research by the Australian Council of Superannuation Investors (ACSI) has shown that nearly 70 per cent of the ASX 200 now report against the Taskforce for Climate-related Financial Disclosures (TCFD) framework, a 31 per cent increase on the year before.
By value, 80 per cent of the index’s market capitalisation now sits in companies committed to net zero, according to the ACSI, with 61 per cent of the AS X200 having now publicly committed to net zero.
The body noted that when the TCFD was released in 2017, just 10 per cent of companies reported against the framework, with this shift indicating that the index is mature enough for the federal government’s planned introduction of mandatory climate reporting.
“Mandatory climate reporting, aligned to the TCFD, will not only provide investors with comparability, it will also bring Australia into line with jurisdictions abroad,” commented Louise Davidson, ACSI chief executive.
“It will focus the minds of the 30 per cent of ASX 200 companies that continue to provide limited information on climate risk to the market. It’s time all companies realise that they, along with the entire economy, face climate risks that they must manage.”
The research also indicated an increased level of detail from companies about the targets they are setting, with a 25 per cent jump in companies putting in place medium-term (2026–39) emissions reduction targets.
Meanwhile, a reported 9 per cent decline in short-term targets was attributed to a combination of changes in the ASX 200 index and to companies having already met their short-term targets.
However, 14 per cent of companies with net zero commitments had no interim targets, calling their net zero commitments into question.
“Net zero targets don’t mean much without the detail of how companies plan to transition their operations, so we’re pleased to see more companies detailing targets to meet long-term goals” Ms Davidson said.
While the ACSI welcomed the improvements, it said that climate reporting across companies revealed significant gaps in detail, depth, comparability, and credibility.
Namely, only 22 per cent of the ASX 200 had set some form of Scope 3 target, though 110 companies reported Scope 3 emissions. As such, the ACSI said their next step must be to develop strategies to reduce those emissions.
The body added that nearly half of the index referred to carbon offsets in their climate strategies, but disclosure on the quantity, type, projects, and hierarchy of their use was limited.
“This research does show a maturing system, which is heartening, but there is a very long way to go, and not a lot of time before Australia must complete its transition to a low-carbon economy if there’s a hope of keeping warming to 1.5 degrees Celsius,” Ms Davidson concluded.