The majority of ASX200 companies are now disclosing detailed information on their environmental, social and governance (ESG) risks and plans to manage them, according to new research by the Australian Council of Superannuation Investors (ACSI).
“When ACSI began this annual ESG reporting project in 2008, knowledge about ESG risks and opportunities was in its infancy, and that was reflected in our early results,” said Louise Davidson, ACSI CEO.
“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.”
At the start of the annual research in 2008, just 31 Australian listed companies provided investors with ESG disclosures rated ‘Detailed’ or ‘Comprehensive’. In 2021, 140 ASX200 companies were rated in those same categories.
“The rise in reporting signals that corporate Australia now recognises that managing material ESG risks is a crucial part of doing business.” Ms Davidson said.
Another encouraging finding is that 64% of the ASX200 now map their risks against individual UN Sustainable Development Goals (SDGs) or use the SDG framework to guide their reporting. Unsurprisingly Climate Action (Goal 13) is the most cited priority SDG. Five years ago, just 10% of the ASX200 reported against the SDGs.
Disappointingly, however, 5%* of ASX200 companies still do not disclose any ESG risks to investors.
‘While not all ESG risks are relevant to all companies, every company faces some ESG risks, and they should be reported,” Ms Davidson said. “If a company does not report, it is not possible for investors to assess whether a company is aware of its ESG risk, let alone how a company is managing its risk.”
The ACSI ESG Reporting Trends research assesses ESG disclosures for the ASX200 to 31 March 2022. It is important to note that the research does not reflect a company’s performance on ESG issues, but its disclosure of them.
“While we are pleased to see ESG reporting has improved substantially, ACSI will continue to focus on the way companies perform on management of ESG risks and opportunities,” Ms Davidson said.
“Given the breadth of critical ESG issues across the economy, integration of ESG issues has never been more important.”
*Correction: when originally published, this media release said ‘6%’. The correct figure is 5%