Skip to main content
Oct 13, 2022

Climate change tops ESG issues list for Australia and New Zealand investors

Multi-frameworks approach for companies’ ESG plans

TCFD, GRI and SASB are the three most-adopted ESG reporting frameworks among Australasian companies, according to a survey from the Australasian Investor Relations Association (AIRA).

The research reveals that 68 percent of companies disclosing their material ESG issues use two or more different frameworks, with TCFD being the most widely adopted (87 percent) in the region.

Ian Matheson, AIRA

Beyond TCFD, the research finds 50 percent of companies surveyed refer to GRI standards and 37 percent turn to the SASB framework.

More generally, the survey – based on responses from 60 IR and ESG professionals from Australia Securities Exchange and New Zealand Stock Exchange companies – also shows that 97 percent of respondents say companies should focus on tackling ESG issues.

Climate change is recognized as the most pressing challenge among ESG issues, with 52 percent of investors highlighting short and medium-term emissions reduction targets as the most important climate-related disclosure in the upcoming financial year.

Casting an eye over the future, 78 percent of respondents say carbon emissions reduction is a key ESG priority for their company in the next five years.

Investor expectations

Ian Matheson, AIRA’s CEO, says companies’ corporate strategies should outline clear countermeasures to ESG issues, as it is what today’s investors ‘expect’.

‘With the rapid evolution of ESG expectations, there is also a need and an opportunity to educate investors on the practical sector-specific challenges companies are facing,’ he says.

Rory Macpherson,
Brunswick Group

Rory Macpherson, partner at Brunswick Group, points out that companies that set a clear ESG strategy are likely to gain a stronger position in the market.

‘Companies that put in place strong governance, transparent disclosure and consistent engagement programs will minimize risks of a negative event, as well as differentiate themselves from peers and create a stronger investment proposition,’ he says.

But the survey notes that almost three in 10 (29 percent) of Australasian companies are yet to publicly commit to achieve net-zero by 2050.

Furthermore, the report shows less than half of companies surveyed (45 percent) are only somewhat familiar with ESG policies and challenges facing firms, with 12 percent reporting a total lack of knowledge.