New how-to guide for ESG reporting
Thursday, 3 March 2016 12:32pm

The Financial Services Council and the Australian Council of Superannuation Investors believe 13% of ASX 200 companies currently fail to provide meaningful information on sustainability factors and a further 17% provide only basic information.

In turn the groups have updated their joint guide for Australian companies on how to identify and report environmental, social and governance issues.

Releasing the 2015 ESG Reporting Guide for Australian Companies yesterday, FSC chief executive Sally Loane said while there is still no mandatory ESG reporting required by listed companies, new ASX recommendations require companies to disclose whether they have material exposure to ESG sustainability risks, and what they are doing to manage the risks.

"We have developed the guide to help them disclose any ESG risks in a consistent way so investors and analysts will have better information to help them make measured investment decisions," Loane said.

"Our reporting guide clearly sets out examples of material risks that investors are looking for in disclosure."

The guide has been developed to provide Australian companies with a framework to disclose the ESG information that institutional investors would look for when considering their investments. It acknowledges the range of reporting frameworks in existence, and does not aim to recreate these but to provide companies with what Australian institutional investors look for when analysing a company's material ESG risks.

ACSI chief executive Louise Davidson said as institutional investors, ACSI members, as well as other investors, need to price and evaluate these risks if they're to protect and manage their investments for the long-term.

"For that to happen effectively, companies need to not just list those risks, but explain how they're managing them," Davidson said.

"This is something ACSI has long been aware of, and active in, for many years.  We've monitored the sustainability reporting of ASX100 companies since 2008, and the ASX200 since 2009. Year-on-year our sustainability reporting research has shown a continuous progress in reporting, but there's still room for improvement."

Loane added shareholders and analysts are increasingly focusing on ESG reporting to gauge companies' performance beyond traditional financial data.

"As our $2.6 trillion funds management industry continues to grow - underpinned by $2 trillion in superannuation - investment managers are increasing their level of scrutiny on ESG risks as a risk management process and a measure of a company's value. This is an important governance measure that will benefit consumers in the long term."

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