In its Climate risk disclosure by Australia’s listed companies report, ASIC examined specific risk disclosures from 60 companies listed on the stock exchange index, in 25 prospectuses for initial public offerings (IPOs) and across 15,000 annual reports.
It found that 17 per cent of the 60 corporates had identified material risks to their businesses and bottom lines as a direct result of climate change.
However, the regulator found that such disclosures of risk were far from useful in assessing the true nature of those risks, with many being “far too general”. Other disclosures were “fragmented” to make comparisons across companies difficult.
“Climate change is a foreseeable risk facing many listed companies in the Australian market in a range of different industries. Directors and officers of listed companies need to understand and continually reassess existing and emerging risks (including climate risk) that may affect the company’s business – for better or for worse,” said ASIC commissioner John Price.
“Climate risk disclosure practices are still evolving, not only in Australia but also globally. We intend to monitor market practice as it continues to evolve and develop in this area.”
The report noted that most of Australia’s top 100 companies have considered the potential impacts of climate change to some extent, but with little degree of consistency.
Businesses outside of the ASX 200 had barely any disclosure of climate change-related risks to their business.
Climate risk is defined as falling within two broad areas: transition risks (including policy, legal, technology and market changes to a lower carbon economy) and physical risks (such as impacts from severe weather events).
ASIC noted that a survey of Australian CEOs by accounting firm KPMG found that 48 per cent believe climate change to be a very real risk to their company’s future growth prospects.