Climate Change Securities Disclosures in Australia

Abstract

This working paper looks at the extent to which current securities filings regulations with the Australian securities authorities require (or alternatively, recommend) listed Australian Securities Exchange (ASX) entities to disclose climate change risks on the performance of a listed entity. The paper also reviews what in practice is being reported for the 2013 reporting year. The ASX Corporate Governance Principles and Recommendations which ASX-listed entities are strongly encouraged to adopt are currently under review and a new proposed 3rd edition draft includes a recommendation that ASX-listed entities disclose environmental and social sustainability risks to investors. Further, the Australian Securities Investment Commission has issued guidance that recommends listed entities include in their annual reporting requirements a discussion of environmental and other sustainability risks where those risks could affect the entity’s achievement of its financial performance or outcomes disclosed, taking into account the nature and business of the entity. A review of the 2013 disclosures made in annual reports from a sample of ASX Top 20 listed entities by market capitalization evidence a lack of comprehensive risk identification and discussion which linked climate change risks to business strategy and financial performance. Many of the annual reports reviewed for the purposes of this work paper contained only limited basic information, if any at all, rather than any substantive disclosure on climate change risks and their materiality on existing or future operations and financial performance.