Sustainable Business Australia and the Global Reporting Initiative welcome the introduction of a new provision for ASX listed companies to identify their environmental, social and economic risks.
On 27 March 2014, the Australian Stock Exchange (ASX) released its revised Corporate Governance Guidelines, which include a new recommendation under Principle 7: Recognise and Manage Risk. The new recommendation, Recommendation 7.4, states; ‘A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages those risks.’ *
“The introduction of this recommendation is an important recognition by the ASX Corporate Governance Council of the potential impact of environmental, social and broader economic issues on the financial bottom line” said Victoria Whitaker, Head of Australia for the Global Reporting Initiative.
ASC Sustainability Disclosure Provisions
Recommendation 7.4 will see all ASX listed companies required to disclose their environmental, social and economic risks or explain why they have not. It builds upon the ASX Corporate Governance Council’s previous guidelines, which listed environment and sustainability amongst a list of risks that companies ‘may’ consider.
“The previous guidance left it open for companies to consider environmental, social and economic risks despite their materiality to the business performance. As a result, only around 7 per cent of listed companies produced any sustainability disclosure. The introduction of this recommendation will bring environment, social and economic risks to the fore, and result in many more companies measuring their sustainability impacts and performance’ said Andrew Petersen, CEO of Sustainable Business Australia.
By introducing this recommendation about sustainability disclosure, the ASX joins Bovespa Brazil, Johannesburg Stock Exchange, Shen-Zeng Stock Exchange and the Shanghai Stock Exchange by requiring companies to disclose their sustainability performance, a trend that is advancing globally.
“In redefining good corporate performance beyond financial indicators and collaborating with investors to support new metrics, Australian businesses have the potential to engage with employees and their supply chain, unlock and attract capital, and attract new customers.” said Petersen.
“There is plenty of research now which shows that companies that consider their environmental, social and economic impacts and performance perform better financially. They attract long term investors and their share price experiences less volatility. And they contribute to the transition to a sustainable and resilient economy” said Whitaker.
SBA (www.sba.asn.au ) is Australia’s leading peak business organisation that galvanises advocacy and action on business solutions for a sustainable Australia. We are business non-profit group with private sector members across all industries and sectors.
Global Reporting Initiative (GRI), a Collaborating Centre of the United Nations Environment Programme (UNEP), produces a comprehensive Sustainability Reporting Framework that is widely used around the world, to enable greater organisational transparency. The Framework, including the Reporting Guidelines, sets out the Principles and Indicators organisations can use to report their economic, environmental, and social performance. GRI is committed to continuously improving and increasing the use of the Guidelines, which are freely available to the public. GRI Focal Point Australia works to advance sustainability reporting in Australia and New Zealand. Website: http://www.globalreporting.org