Investors will have a much clearer picture of how climate risks and opportunities are being managed across the economy following the passage of the Federal Government’s mandatory climate reporting legislation through the Senate, the Australian Council of Superannuation Investors (ACSI) says.
Climate-change related risks are financial in nature, deeply embedded across the economy and a significant challenge for Australian companies and investors, including superannuation funds.
Mandatory climate reporting should provide ACSI members with clearer information about their investee companies’ exposure to physical and transitional risks related to climate-change. This information will be integrated into investment processes and used by investors in their risk assessment and stewardship activities.
“This very welcome development sees Australia follow other jurisdictions around the world. Climate change is a global issue and needs a global response. Mandatory reporting in Australia will help investors and others to get a clearer picture of how climate risks are being managed domestically,” ACSI CEO Louise Davidson said.
ACSI and its members have long called for greater transparency of listed companies’ climate related risks and opportunities, and this legislation will support investors in making important investment decisions. ACSI’s research has shown the majority of ASX200 companies already disclose their management of climate risks, but mandating reporting will aid the comprehensibility and comparability of disclosures and provide clearer guidance for new reporters.
“The passage of this legislation signals the clear role investors, companies and the broader market have in the road to decarbonisation,” Ms Davidson said.
“We expect it to drive transparency in Australia’s largest companies and lift the standards and content across the market.”
ACSI also welcomes the passage of legislation to establish the Net Zero Economic Authority, which aims to promote a just and orderly transition to a low-carbon economy.