The rapidly evolving ESG space has undergone a shift from aspiration to policy and obligation, posing challenges to companies within the financial services industry.
Objective vice president Andy Moy said that some organisations have been left grappling with some key uncertainties in the face of new standards and regulations in the space.
“We know that financial services companies are saying, ‘Sure, that’s great. You’ve certainly got me on the global need for change and this responsibility that we all have, but exactly what do I need to do to comply? Because I’m a commercial organisation, I’m going to need you to tell me what I need to disclose and what my obligations are here’,” he said.
In December last year, the federal government published a consultation paper on the development of a new Australian climate risk disclosure framework.
“This internationally aligned framework will provide business and investors with the clarity and certainty they need to manage climate risks and invest in new opportunities,” Treasurer Jim Chalmers, Assistant Treasurer Stephen Jones, and Minister for Climate Change and Energy, Chris Bowen said at the time.
“It will ensure large business and financial institutions are providing more information and greater transparency on how they are responding to climate change and supporting the transition to net zero.”
Drawing a comparison with the design and distribution obligations (DDO), Mr Moy said that the focus on ESG is set to lead to more specific disclosure and reporting requirements.
According to Mr Moy, this is where software such as Objective Keystone can play a role.
“Keystone is an authoring and compliance tool for the preparation, sign off, publishing and submitting of regulated documents and data,” he explained.
“ESG is just another form of that, that we know we’ll need to be able to help organisations meet in the future. So ESG will lead to more disclosure standards, Keystone will be used to prepare those statements and meet those obligations, and we’ll be working with the FSC on what that means.”
FSC CEO Blake Briggs said that the industry has an important role to play in the transition to net zero and in addressing the challenge of climate change.
“The allocation of capital in both the Australian and global economies is a really important part of moving towards sustainable investment and delivering long-term value for clients,” he said.
“This means recognising the risks that climate change poses to an existing portfolio as well as where there are mitigation, emerging technologies or other investment opportunities that can deliver those investment returns that people want to see as this transition occurs.”
