The Financial Services Council (FSC) has called on the government to introduce mandatory carbon risk disclosure reporting for all ASX-listed companies.
In one of 26 submissions received by the Greens-initiated Carbon Risk Disclosure Senate inquiry, the FSC advocated “greater disclosure in relation to carbon risk”.
“We see real value in this type of reporting as it promotes transparency and ensures that investors are cognisant of the climate risks inherent in their investment portfolios,” said the submission.
Specifically, the FSC submission supported a mandatory requirement for ASX-listed companies to “disclose their exposure to particular carbon risk areas, rather than just total greenhouse gas emission during a specified period”.
“Carbon risk areas subject to disclosure could include carbon intensive assets such as power generation, oil and gas pipelines, fossil fuel reserves, et cetera.
“This requirement could initially be flexible and then be tightened over time as reporting disclosure improves, thereby allowing investors to access better data,” said the submission.
However, the Business Council of Australia rejected mandatory reporting requirements, arguing that “the most effective carbon risk disclosure efforts will continue to be voluntary and industry-led”.
“There are an extensive number of existing mandatory and voluntary carbon risk reporting initiatives and there is no need to mandate further carbon risk disclosure at this time,” said the Business Council's submission.
The Chartered Accountants Australia and New Zealand submission echoed the Business Council's opinion that the current, voluntary disclosure requirements are sufficient.
Submissions from ESG researcher Regnan, the Responsible Investments Association Australasia and Australian Ethical Investments backed mandatory and more detailed carbon risk disclosure requirements.
The Senate inquiry into carbon risk disclosure is set to hand down its report by 22 June 2016.
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