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ASX 200 a long way off meaningful ESG reporting, report finds

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On the surface, Australian businesses look to have done some heavy lifting to keep pace with changes in global ESG reporting in the past 12 months, but PwC’s latest analysis has revealed that many lack clear targets and could be susceptible to greenwashing.

According to a new report that looks at ESG reporting in Australia, 87 per cent of the top 200 Aussie companies returned substantial meaningful ESG reporting – up 29 per cent from last year’s analysis.

While overall progress has been deemed encouraging, PwC Australia ESG assurance lead, Matthew Lunn, expressed cause for concern.

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In fact, PwC uncovered that only 36 per cent of the ASX 200 have a net-zero target, while less than half or 47 per cent have a gender diversity policy with measurable targets.

Moreover, an overwhelming 76 per cent of the ASX 200 do not have a Reconciliation Action Plan endorsed by Reconciliation Australia, while 41 per cent do not have ESG skills as part of their board matrix.

“We’re witnessing enormous investor-driven demand for information about a company’s commitment to ESG activities, which provides a significant opportunity to impress capital markets and reap the rewards of doing so by clearly demonstrating goals and commitments  but while we’ve seen improvement in 2021, there’s a long way to go,” said Mr Lunn.

PwC found that disclosures are not always backed with genuine plans despite an obvious uptick in stakeholder activism. 

“It’s essential that companies are setting transparent and meaningful targets based on the strategies they disclose  because without measurable and assurable key performance indicators, based on globally-recognised taxonomies and science-based targets, their ESG statements and sentiment may be seen as ESG washing, or greenwashing,” Mr Lunn stressed.

“A strategy without a plan, a timeframe and measurable targets to be held accountable against is not a strategy, but merely a statement of ambition,” he added.

Another tip, Mr Lunn said, it to demonstrate commitment by linking targets to executive remuneration. 

“In our view, quality ESG governance also requires management’s remuneration and long-term incentives to be linked to the achievement of the organisation’s ESG targets, no different to other strategy-related metrics built into remuneration frameworks,” said Mr Lunn. 

“This ensures clear responsibility and lines of reporting from skilled management to the board in areas as broad an environmental impact and climate change, risk management, human resources and diversity and inclusion.”

And while Australia may have a passive approach to enforcing ESG reporting obligations, Mr Lunn explained that changes around the globe are increasingly impacting local companies, particularly those that operate in territories with more sophisticated regulatory systems.

“These developments mean the speed of change to Australia’s own ESG reporting regulatory regime is becoming increasingly irrelevant,” Mr Lunn opined.

 

 

ASX 200 a long way off meaningful ESG reporting, report finds

On the surface, Australian businesses look to have done some heavy lifting to keep pace with changes in global ESG reporting in the past 12 months, but PwC’s latest analysis has revealed that many lack clear targets and could be susceptible to greenwashing.

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

 

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