In a new report, The Sustainability Reporting Journey: Corporate Reporting in Australia- Disclosure of Sustainability Risks Among S&P/ASX200, ACSI found that while there has been a notable improvement in the quality of sustainability reporting, this is still “too slow to effect real change”.
“These are important issues for investors - both superannuation funds and their investment managers - because they’re long-term investors and [ESG] issues tend to have a long tail risk,” ACSI chief executive Ann Byrne told InvestorDaily.
“Awareness is growing, in particular large companies are reporting well, but the medium to smaller companies need to really start to think about their ESG risks and their reporting.”
According to the report, the number of companies reporting to a “detailed” or “comprehensive” level has increased from 23 per cent in 2012 to 36 per cent in 2013.
However, 45 per cent of ASX200 companies are rated at “no reporting” or at the “basic” reporting level, which is an increase of only four per cent from the previous year’s findings.
“The moderate category has moved up to detailed and comprehensive [over the year] but then there are a group of companies who are maintaining themselves as basic or no reporting,” Ms Byrne said.
“If the number of companies reporting to a comprehensive level continues to increase by the same annual rate it has in 2013, it will be almost 20 years before all ASX200 companies are disclosing ESG risks at this level.”
Ms Byrne said that ACSI has previously worked with the Financial Services Council to encourage companies to enclose their risk and will continue to push for improved sustainability reporting.
“We will engage with the non-reporting companies, we will let them know their results and we will have discussions with them to encourage them to increase their reporting,” Ms Byrne said.
“Because until they do so, it’s very difficult for investment managers to integrate these risks into their investment models.”
