ESG reporting in Australia - the full story, or just the good story?

PwC’s comprehensive analysis of the ASX200’s ESG reporting and governance

As expectations and demands on Australian entities continue to rise with respect to ESG (environmental, social and governance) and CSR, our in-depth analysis uncovers just how serious the top 200 companies (ASX 200) across the country are on addressing and reporting on material ESG risks and opportunities.

Our research considers findings from last year’s report ‘Are we keeping pace?’, and identifies areas of improvement, as well as areas of concern.

Stakeholders across the board want to understand more from Australian businesses; do they articulate short, medium and long term ESG goals? Are they fully aware and addressing various ESG risks, and are they linked to financial statements? Adversely, what ESG opportunities lie ahead for those willing to transform?

The pressure is on, now more than ever, for the ASX 200 to improve their ESG performance and keep pace with stakeholder expectations by transparently reporting on how they are building ESG into their strategic plans, governance structures and activities.

Download our report to learn more

ESG reporting in Australia - the full story, or just the good story?

Compare the ASX 200 ESG data for FY21

Use the dropdown filters to see how sectors perform against each other and how reporting changes with ASX 200 positioning.

^{FY21 data includes the entire ASX 200 as at June 30 2021.}

While the Australian regulatory environment might be perceived as one with minimal ESG reporting obligations, this is changing. Changes to APRA (based largely on accepted guidance from the TCFD), mean Australian companies should be considering how they report in a more sophisticated manner to better meet global, and soon to be local, mandates. This rings especially true for those with significant operations in markets such as New Zealand, the United Kingdom and the European Union - where global developments and legal requirements mean the speed of change to our own ESG reporting becomes irrelevant.

For companies seeking significant sources of capital, ESG and CSR considerations are a first port of call for many finance providers who are looking to make investment decisions that reflect the drive to a more sustainable future.

Balance is a key concept in ESG reporting. It includes not omitting relevant information concerning negative impacts across various material ESG areas. Our analysis shows 43% of the ASX 200 don’t disclose information on the negative impacts they’re having across their value chain. Many companies don’t include information on ESG topics they consider immaterial to their organisation. By doing so, they leave themselves open to scrutiny and assumptions by stakeholders. A good example of this is the number of companies that don’t provide details on if they have a Reconciliation Action Plan (RAP) endorsed by Reconciliation Australia (only ¼ do this). While we acknowledge it doesn’t automatically follow that a company without a RAP doesn’t mean they’re not doing their part to advance reconciliation, it does mean the company can expect to have to provide further detail on what they are doing to progress in this area in the future.

Key insights from this year's report

ESG strategy disclosures have improved but reporting against KPIs continues to lag
Better stakeholder engagement amid increased pressure from stakeholders
Lack of external verification is notable
ESG Risk and opportunity reporting improved, but linking material ESG uncertainties to financial performance and reporting still needs improvement
Diversity and inclusion – greater gender focus, but what about other areas?
Focus on RAPs has grown, but unfortunately not significantly

Our findings highlight a year of improvements in the maturity of ESG (Environmental, Social and Governance) reporting of Australia’s top 200 companies (ASX 200). The gap is closing between those at the bottom and those at the top regarding the quality of their ESG reporting, with many companies responding to stakeholders' raising the bar. However, alongside notable pockets of excellence across select ESG matters, our analysis reveals a more nuanced picture where progress is still lacking in critical areas.