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Following the formation of the International Sustainability Standards Board (ISSB) in 2021, the stakes for ESG reporting are at an all-time high. Our detailed analysis reflects on last year’s findings, and focuses on how well the ASX200 meet current draft standards set out by the ISSB.
We have continued to see a significant uplift in the number of companies reporting on ESG performance. While ASX200 companies across the board have progressed the maturity of their ESG reporting this year, there are compelling reasons for them to accelerate their efforts.
The ISSB, formed by international accounting standards-setter the IFRS Foundation, is merging various voluntary ESG frameworks into a single set of global disclosure standards. The bar for alignment to these proposed standards is high. Under existing drafts, companies must quantify and disclose the anticipated effects of 'significant' sustainability and climate-related risks and opportunities on their business model and value chain over the short, medium and long term. With further disclosures required, and with stakeholders placing increasing value on ESG metrics, companies will likely need to revisit approaches to confidently report this data.
The ISSB's standards allows companies to re-evaluate how they manage and operate their business and identify not just their climate and sustainability-related risks but their opportunities too. However, the task that lies ahead is tremendous.
According to our analysis, despite year-on-year improvements in ESG reporting, ASX200 disclosure levels will need to be significantly enhanced to meet the proposed standards of the ISSB, particularly in quantifying the financial impact of risks and opportunities.
This year’s analysis of ESG reporting maturity covers ASX200 companies that have reported since the ISSB Drafts were released. In other words, companies that are December, March and June year-ends that have released their FY22 reports by 14 October 2022. Throughout this report, where we note ‘ASX200’, the number of reports included in the analysis from the top 200 companies is in fact 165.