$30 Trillion Investor Group Calls For Climate Reporting From Big Private Companies

The Investor Group on Climate Change today called for Australia’s new climate reporting regime to cover large unlisted companies from day one, along with ASX 300 firms and all large financial institutions.

Private companies are responsible for approximately 60% of the country’s carbon emissions, according to new data analysis commissioned by the IGCC[1].

The government’s phase-in period for the regime should be no more than three years, and the government should publish its phase-in roadmap so that companies can plan and build their capacity.

Reporting entities should have to publish standardised climate transition plans that lay out their forward-looking strategies for the opportunities and risks of climate change.

The UK has already legislated a requirement for mandatory climate transition plans, as have other leading jurisdictions.

Quotes From Director of Policy, Erwin Jackson:

“Investors stand ready to put capital to work funding Australia’s transition to net zero. To do that they need a reliable picture of climate impacts and opportunities, and they need to know which companies have strong plans.

“Australia’s private and public companies should be on a level playing field, working to the same rules, and making the same contribution to the overall picture.

“Investors don’t want firms to just pay lip service to climate impacts; companies shouldn’t just stop their thinking at the front door; they need to be thinking about how a changing environment will be affecting their supply chains, their logistics, their workforce, and their customers.

“Investors can’t protect their beneficiaries’ interests by divesting from one sector or another; climate change and the transition to net zero are already having impacts on the whole economy.”

IGCC’s members manage more than $30 trillion globally and have more than 7.5 million beneficiaries in Australia and New Zealand.

The group’s calls are included into its submission in response to the Treasury Consultation Paper on Climate-related financial disclosures.

Selected Investor Recommendations

Scope 3 Emissions

Ensure emissions disclosure covers a company’s equity exposure and the entire value chain, including material scope 3 emissions (including all fossil fuel exposed industries), recognising that indirect emissions present the largest business transition risk to many investments and companies.

Physical Risk Exposure

Require that reporting entities’ transition plans include the full risk and impact of direct and systemic physical climate risks on business inputs including supply chains, logistics and workforce.

Covered Entities

Phase-in compliance requirements based on size starting with:

• ASX 300-listed companies
• Large, unlisted companies (including government-owned companies) with annual consolidated revenue of at least $100 million
• Large financial institutions (banking, superannuation, asset management and insurance) with either annual consolidated revenue of at least $100 million or total assets under management of at least $5 billion.

Timing

• Commence reporting for first phase covered entities by no later than 2024-25 financial year.
• Establish a clear, timebound roadmap to implementation representing economy-wide coverage, showing entities covered in each phase over a maximum 3 year period.

A summary of all investor recommendations can be found on Page 3 of the submission.

Download the Submission

[1] Refer to page 10 of IGCC’s Submission to Treasury Consultation Paper on Climate-related financial disclosure

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