Consistent climate disclosures matter: ASFA, ACSI

The Association of Superannuation Funds Australia (ASFA) and the Australian Council of Superannuation Investors (ACSI have joined four other peak investment bodies to push for continued transparent and comparable climate disclosure.

Other organisations include Investor Group on Climate Change (IGCC), Australian Sustainable Finance Institute (ASFI), Principles for Responsible Investment (PRI) and Responsible Investment Association Australasia (RIAA).

In a statement, the associations said climate disclosures inform valuation, asset allocation, investment, lending and underwriting decisions, as well as stewardship and due diligence.

They noted institutional investors, asset managers, banks, insurers and other financial institutions use the disclosures to help assess physical and transition risks, understand potential financial impacts and test business resilience under different scenarios.

"Consistent reporting allows users to compare companies and sectors, identify concentrations of exposure across portfolios, supply chains and the broader economy, and evaluate investment and financing opportunities," the statement read.

They added the value of this information extends to users through external managers, data and index providers, ratings agencies and stewardship services, where it is combined with other information.

"Super funds invest for Australians whose retirement may be decades away," ASFA chief executive Mary Delahunty said.

"Consistent, comparable and credible climate disclosures help funds assess risks, identify opportunities and allocate capital in members' best financial interests. Getting the disclosure framework right will drive better investment decisions and support stronger retirement outcomes for all Australians."

The peak bodies recognised there has been significant effort in implementing the disclosures including investment in systems, data, people and assurance, but noted early evidence showed mandatory reporting is already improving the availability, transparency and comparability of information.

"For long-term investors, good climate disclosure is essential, revealing the extent to which boards are engaging with material risks and opportunities, and how they are being factored into strategy, capital allocation and long-term resilience," Australian Council of Superannuation Investors chief executive Louise Davidson said.

"Clear, comparable information gives investors confidence that those matters are being properly overseen and managed on the path to a net zero economy."

As preparers and users gain experience, the associations expect reporting to become more useful and efficient, supporting greater integration of climate-related risks into governance, risk management and strategic decision-making.

"Maintaining a credible, proportionate and internationally aligned framework will be essential to ensuring these benefits continue to grow over time," the statement read.