As the convergence of ESG reporting frameworks continues, a number of new or updated ESG reporting standards, global and regional, are being finalised and released. Georgeson’s specialised knowledge of institutional investors’ expectations and key influences offers you the ability to identify and address the material ESG risks affecting your investors’ portfolios. We also help you provide investors with the data they need by transitioning seamlessly to the new standards.
New standards affecting Australian companies
International Sustainability Standards Board (ISSB) ESG standards
Under the auspices of International Financial Reporting Standards (IFRS), the ISSB global standards S1 and S2 were released on 26 June. They are partly based on existing frameworks like Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).
Applicable from 2024, they comprise a single, globally-applicable ESG standard suitable for all investors, relating to general sustainability reporting issues (S1) and specific climate related issues (S2). Further ISSB standards relating to issues such as biodiversity and natural capital, and updated SASB sector-specific standards, will follow in coming years.
The Australian Accounting Standards Board (AASB) is now considering how and when the new ISSB standards will be applied locally and expects to complete this work by Q2 2024, giving these new standards equivalent status to existing financial reporting standards in Australia.
Climate-related financial disclosures are to become mandatory for large Australian businesses and financial entities. The Australian Government has stated that it will require disclosures related to carbon footprint, greenhouse gas emissions, scenario planning and climate risk. The new rules are proposed to take effect from 2024/25 for larger reporting entities, including most listed companies, and in following years for smaller reporting entities.
Australia’s key market regulator ASIC has adopted a very prominent enforcement campaign against issuers they consider to be overstating (or understating) their sustainability credentials through ‘greenwashing’ (or ‘greenhushing’). Specific additional requirements are already in place for financial institutions under standards issued by the prudential supervisor, APRA.
Other important changes to ESG standards
The European Union’s Corporate Sustainability Reporting Directive (CSRD) and its associated European Sustainability Reporting Standards (ESRS) will become mandatory for 49,000 EU companies starting January 2024. They will impact any ASX company with an EU turnover of €150 million or more.
The US SEC’s proposed Climate Disclosure Rule will require companies to disclose climate-related information along the lines of TCFD reporting. The finalised rule is expected to be released in late 2023 and is expected to be applicable to Australian companies required to report in the US.
The Global Reporting Initiative (GRI) has updated its Universal Standards, eliminated Topic Standard groupings, rewritten eight Topic Standards and is releasing mandatory sector-specific standards over the next two years. Issuers, including Australian ones reporting against GRI, are expected to use the updated standards for all reporting after January 2023.
How can we help? Investor-focused disclosure
Georgeson’s unique offering is our specialised institutional investor focus, based on over 80 years of experience talking to institutional investors and tracking proxy votes on transactions and AGMs. We use this deep understanding of the key influences driving institutional investors’ ESG reporting to help our clients understand and navigate the complex and ever-evolving ESG reporting ecosystem.
We work with your team to profile your institutional investors and review peer ESG reporting, ESG rating agency scores and proxy advisor preferences. We map the key influences and assess which issues are most material to your company. We then devise ESG strategies, plan and prioritise your disclosures and structure relevant, targeted reporting for your shareholders, financiers and other stakeholders.
With our comprehensive understanding of ESG standards we will help you plan to make the required changes.
Contact Paul Murphy, Head of ESG, at paul.murphy@georgeson.com.
For more information about Georgeson’s other services, visit the Georgeson Australia website www.georgeson.com/au.
Paul Murphy
As Georgeson’s Head of ESG, and with over 25 years in the financial services sector, Paul Murphy advises Asia Pacific clients on managing their environmental, social and corporate governance risks and opportunities.