Australian investor groups launch ESG reporting guide for companies

Super funds and wealth managers give investor perspective on ESG

Australian investor groups the Australian Council of Superannuation Investors (ACSI) and the Financial Services Council have launched a guide to help companies to identify and report their environmental, social and governance (ESG) risks.

The ESG Reporting Guide for Australian Companies outlines the essential information and data that investors require to accurately price, analyse and manage ESG risks.

The 28-page guide, subtitled “Building the foundation for meaningful reporting”, details how information should be disclosed, how it should be reported and – crucially – explains to firms why it is necessary to investors. It was launched today at Financial Services Council’s annual conference.

It details investors’ disclosure requirements on: environment (climate change, environmental management systems and compliance, efficiency); social (workplace health & safety, human capital management, corporate conduct, license to operate) and corporate governance. It gives examples of good practice.

“We look forward to the Guide facilitating an improvement in the disclosure levels, consistency and quality of engagement over ESG issues between Australian companies and their institutional investors,” said the two bodies’ CEOs Ann Byrne (ACSI) and John Brogden (FSC) in the foreword. ACSI represents super funds with a combined A$300bn (€223.7bn) of assets while the Financial Services Council represents wealth managers with some A$1.8bn of assets.

The guide is intended to help companies that do not report their ESG risks to begin the process while showing others how to streamline or simplify their reporting. This included eliminating immaterial information.It has been prepared in consultation with the Australian Institute of Company Directors, Chartered Secretaries Australia, Group of 100, Business Council of Australia, Australian Shareholders Association, fund managers, superannuation funds and research houses.

ACSI’s Byrne said that, while many companies have made progress on ESG risk reporting, “most still struggle to grasp the concept of ESG risk exposure, how to measure it and how to manage it”.

Byrne – elected this week to the UN Principles for Responsible Investment’s new Advisory Board – hoped the new guide would “bridge that gap in understanding” that ESG reporting is not just a ‘nice to have’ but an essential business indicator.
Brogden said this was the first Australian guide to provide companies with the investors’ view of how ESG information should be disclosed. He said: “Institutional investors consider ESG factors to be critical to the long-term performance of the companies in which they invest.
“However more than half of the companies on main ASX 200 index fail to provide meaningful information on their ESG risks.

“This is not a requirement for more disclosure – it is about better disclosure.”

The guide builds on research conducted for ACSI and the Financial Services Council’s forerunner organisation the Investment & Financial Services Association by consultants Mercer last year called ESG integration by mainstream Australian Equity Managers.

Elsewhere in Australia, Regnan Governance Research & Engagement has confirmed Amanda Wilson as Managing Director. She joined Deputy MD a year ago and had been in the acting MD role after Erik Mather left due to illness.