The Australian Council of Superannuation Investors (ACSI) has announced updates to its governance standards to help companies keep up with the evolving expectations investors have on ESG issues.
The industry body’s governance guidelines aim to inform businesses about how board decisions and actions on ESG will be viewed by long-term investors.
“Over the past two years, we have seen the financial impact that can occur when companies mismanage ESG issues,” said ACSI CEO Louise Davidson.
“Our guidelines seek to promote better ESG performance of listed companies and ensure companies have a clear understanding of the issues important to investors.”
ACSI currently consists of 34 Australian and international asset owners and institutional investors with a total of more than $1 trillion in funds under management.
While noting that good governance remains the main focus of its guidelines, ACSI said it has made a number of changes to its standards to reflect critical ESG issues.
The body has now integrated its climate change policy within the guidelines alongside information about how it will guide voting recommendations.
Guidance about engagement with First Nations peoples, including the material financial risks companies and investors may face due to poor engagement and cultural heritage practices, has also been added to the guidelines.
Drawing on its own research, ACSI is including information about sexual harassment and the expectations for companies to respond effectively and proactively.
Furthermore, additional guidance on modern slavery, human rights, diversity and safety have been included.
“One principle underpins everything we do. We are focused on financially material ESG risks and opportunities over the long term to protect and enhance the retirement savings that are entrusted to our members,” said Ms Davidson.
“As the risks and opportunities associated with ESG issues evolve, so do the investor expectations.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.