ASX Sustainability Reporting ‘Very Disappointing’

Almost half of the companies listed in the Australian Stock Exchange Top 200 list (ASX200) have provided little or no sustainability reporting in their annual reports, according to new research.

Almost half (45%) of ASX200 companies were found to have rated at a level of No Reporting or Basic Reporting when it comes to their annual sustainability reports.

The report, The Sustainability Reporting Journey: Corporate Reporting in Australia – Disclosure of Sustainability Risks Among S&P/ASX200 Companies, was released by The Australian Council of Superannuation Investors (ACSI), focussing on the impact that environmental, social and governance (ESG) risks have on the long-term viability of companies and their investors.

“There are still 45% of ASX200 companies in this year’s study that are rated as No Reporting or Basic Reporting – an improvement of only 4% from the 2012 findings,” Chief Executive of ACSI Ann Byrne said.

“The overall rate at which change is occurring is therefore very disappointing.

“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.”

According to Byrne, there are eight companies in the ASX200 who are lagging behind more so than others.

“Eight companies are considered to significantly lag behind their peers, having been rated as No Reporting for four or more consecutive years, despite having been contact by ACSI annually to highlight the need for improved disclosure,” she said.

The report goes further by naming the ‘laggers’ ask: Abacus Property Group, Cudeco Limited, Carsales.com Ltd, Fleetwood Corp Ltd, Iress Limited, Karoon Gas Australia Limited, Platinum Asset Management Limited and The Reject Shop Limited.

“ACSI has communicated to these companies the importance of reporting in relation to management and performance across a range of risks, including environmental and social (internal and external) risks and has clearly recognised that material risks will differ between companies,” Byrne said.

The report also found a degree of correlation between company size and sustainability reporting level, with 23 corporates highlighted for their continuous levels of benchmark disclosure, but also their willingness to continue to improve.

Key findings of the 2013 research include that:

• 85% of companies in the ASX200 provide at least a Basic level of sustainability risk reporting
• 39 companies in the ASX200 have at least some of their sustainability reporting data verified by an external party and almost all of these companies fall into the reporting category of Comprehensive
• The number of ASX200 companies using the Global Reporting Initiative (GRI) framework has increased by five companies to 43, with 80% of those companies falling into the ASX100

“To enable investors to effectively price and manage risk during their analysis of an investment, there is a need for relevant information, and companies must understand the form that information should take –commensurate with the risks specific to their industry sector,” Byrne said.

“It must be meaningful, accurate, timely and comparable data to help investors identify and manage their exposure to ESG investment risks.”

Research for the project was conducted as a desktop review of publicly available information as at 31 March 2013, with a company required to report on performance against sustainability risks and not simply discuss those risks or the company’s commitment to sustainability in general.

The five levels used by the report were: No Reporting, Basic, Moderate, Detailed and Comprehensive.

A copy of the full report including details of the ‘leaders’ and ‘laggards’ and more detail on the methodology are available on the ACSI website at www.acsi.org.au