Top ASX firms lift reporting on ESG issues

A LNG storage tank in China.
More top ASX companies are providing detailed information to investors on ESG risks. -AP

Almost three-fourths of the top 200 companies listed on the Australian Securities Exchange now report detailed or comprehensive information to investors on managing environmental, social and governance (ESG) risks, an annual survey shows.

The 14th annual ESG Reporting Trends survey by the Australian Council of Superannuation Investors (ACSI) also showed 94 per cent of the ASX 200 companies now provide some information on ESG issues in 2021.

More than half of the top listed firms, or 104 out of 200, are now considered comprehensive reporters, the highest rating given by ACSI. 

These included mining giants BHP, Rio Tinto and Fortescue, the big four banks, Telstra, Qantas and both supermarket giants Woolworths and Coles.

In all, 140 of the ASX 200 companies now provide the two highest levels of disclosure - "Detailed" and "Comprehensive".

Only 10 per cent of companies were considered comprehensive reporters in 2008, when ACSI first measured ESG reporting. The number had risen to 86 companies in 2020.

"These year-on-year improvements highlight the increasing company recognition that ESG risks are material to their overall, long term performance - and the need to disclose to investors how they manage these risks," ACSI said.

ESG performance has become increasingly important for listed companies in recent years as investments into so-called ethical or green funds have soared. According to Deloitte, funds with ESG mandates held assets worth $US46 ($A67) trillion globally in 2021.

ACSI assesses ESG disclosures by analysing publicly available data including ASX announcements, annual reports and other corporate reports. It only measures a company's disclosure of ESG issues, not their actual performance.

Two-thirds of ASX 200 companies report their ESG risks against the United Nation's Sustainable Development Goals, or use them to guide reporting, ACSI said. Climate action is the most cited priority by companies.

Materials, property, consumer staples and utility companies lead the way on ESG reporting, but the report termed the healthcare and information technology sectors as "laggards".

The healthcare sector has no "comprehensive"-rated companies at all, highlighting a sector-wide gap, it said.

While the sector had many mid-cap and smaller firms that have different ESG risk profiles, these companies will have ESG risks, particularly given the two-year long pandemic, workforce related risks, and modern slavery risks associated with healthcare supplies, the report noted.

Twelve companies that are part of the ASX 200 still don't provide any disclosure on ESG issues at all, the survey found, although it said the number of such firms has been falling.