Climate risk needs more disclosure, finds ASIC

Climate risk reporting and disclosure outside of the ASX200 companies is severely limited, according to a new report published by the Australian Securities and Investments Commission (ASIC).

The Climate risk disclosure by Australia’s listed companies report sets out high-level findings and recommendations for listed companies following an ASIC review of disclosure practices in the market.

The review examined climate risk disclosures:

  • by 60 listed companies in the ASX 300;

  • in 25 recent initial public offering (IPO) prospectuses; and

  • across 15,000 annual reports.

Of the 60 listed companies in our ASX 300 sample, 17% identified climate risk as a material risk to their business. While most of the reviewed ASX 100 entities had considered climate risk to the company’s business to at least some extent, disclosure practices were considerably fragmented, with information provided to the market in differing forms across a wide range of means of disclosure.

The Investor Group on Climate Change welcomed the report, calling on more Australian companies to increase their efforts to meet investor demand.

“Financial regulators are clearly telling corporate Australia that they must report on climate change risk with the same level of rigour as any other financial risk. This report finds that currently they are not”, said Emma Herd, CEO of the Investor Group on Climate Change.

“Australian companies must lift their game when it comes to reporting on climate change risks, or they risk losing access to capital”.

“While there is some evidence of progress for larger companies, worryingly ASIC found that the level of reporting has actually gone backward as regulatory signals have weakened over the past few years. This is especially true for companies outside of the ASX100”.

The full report can be found here

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