The number of companies stepping up their level of ESG disclosure has risen from 86 in 2020 to 104 companies in 2021, the new report compiled by the body that boasts 31 Australian and international asset owners and institutional investors as members has revealed.
Although COVID-19 caused severe disruptions to businesses throughout 2021, the majority of ASX 200 companies – over 50 per cent – are now in the “comprehensive” reporter category, a significant improvement from 2008 when the category only boasted 10 per cent of companies.
Overall, 140 ASX 200 companies fall within two highest levels of disclosure – “detailed” and “comprehensive”.
According to the Australian Council of Superannuation Investors (ACSI) this demonstrates that “reporting on ESG issues is now the norm and that companies realise the necessity of demonstrating their ESG performance to investors.”
Commenting on the research, Louise Davidson, ACSI CEO, said that when the body began its annual ESG reporting project in 2008, knowledge about ESG risks and opportunities was in its infancy.
"Over those years, the quality and detail of reporting on material ESG issues has progressively risen. Now, providing investors with ESG disclosures is the norm rather than the exception," Ms Davidson said.
The body further found that the “comprehensive” category experienced the largest boost in the reviewed period, followed by “detailed” reporters, while the number of companies reporting only basic data dwindled.
The ACSI’s focus, it said, will not turn to encouraging “the remaining laggards to improve their reporting of the material ESG risks and opportunities particular to their companies.”
Interestingly, however, 6 per cent of ASX 200 companies do not provide any ESG disclosure whatsoever, but this percentage was found to be decreasing each year.
“While not all ESG risks are relevant to all companies, every company faces some ESG risks, and they should be reported,” Ms Davidson said.
Additionally, mid-capitalisation companies (ASX 101-200), have shown growing ambitions and variability in their ESG reporting, with 57 per cent now rated as “detailed” or “comprehensive” reporters. This has seen an an overall increase of 50 per cent increase since 2008.
Further findings in the ACSI assessment have revealed that 64 per cent (an increase from 10 per cent just five years ago) of the ASX 200 are reporting against the United Nation’s Sustainable Development Goals (SDGs) by either mapping their risks against individual SDG goals or using the SDG framework as a guideline for their reporting.
ACSI revealed that the top priority SDG is climate action, followed by decent work and economic growth.
“Consistent with the accelerating focus by business and society more broadly on the risks of climate change, climate action continues as the top priority, followed by Decent Work & Economic Growth.
“This is consistent with previous years and reflects the critical ESG issues of our time: increasing action on climate change, as well as the importance of prioritising workforce and business growth in the COVID-19 pandemic recovery,” the report noted.
Climate action has continued to be the most frequently referenced SDG across the ASX200.