ACSI review of climate disclosures

The Australian Council of Superannuation Investors (ACSI) has released its latest survey of climate change strategies and disclosures of ASX 200 companies. The survey is based on all publicly available documents by the ASX 200 as at 31 March 2021. The surveyed data provides factual support for ACSI’s policy and expectations on managing climate change risks for ASX 200 companies (see the policy details HERE). The policy includes recommending their members vote against directors of ASX 200 companies who consistently fall short of expectations.

The main takeaways from the report include:

  • 80 (FY19: 60) companies have adopted the TCFD framework for climate disclosures.
  • 49 (FY19: 14) companies have net zero commitments. Of the 49 companies, 19 companies have fully mapped their pathway to net zero with interim targets.
  • 94 (FY19: 74) companies have set emissions-reduction targets. Of the 94 companies, 66 have set short-term targets to 2025, 54 have set medium-term targets to 2026-39, and 37 have set long-term targets to 2040+.
  • 18 companies obtained science-based accreditation to verify their scope 1 and 2 emission targets are in line with Paris Agreement.
  • 15 companies have set targets and actions to reduce scope 3 emissions.
  • 12 companies have included specific climate change metrics in FY21 executive incentive plans.

As companies develop their climate risk strategy to include robust targets and disclosures, ACSI expects to see these companies integrating climate-related metrics into the executive incentive plans. This is consistent with the two main climate change shareholder activists, the Australasian Centre for Corporate Responsibility and Market Forces. Reflecting this emphasis, in engagement sessions for this proxy season two of the four proxy advisers have notably stepped up their expectations of climate exposed issuers to include targets in incentives plans. One of these is particularly focussing on LTIs in an abrupt change from the prior season that is not yet reflected in its official guidelines.

ACSI also noted more work was required to address scope 3 emissions. Among the 15 companies with scope 3 emission targets, there was no consistent strategy or approach to address scope 3 emissions. However, ACSI recognised the difficulties with some companies having little operational control over the end-use of the products.

To view ACSI’s full report, see HERE.

© Guerdon Associates 2024
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