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Business urged to go further on integrated and climate risk reporting

Australian business has been told that there are significant advantages for organisations prepared to invest in better corporate reporting around non-financial risks, such as climate.

Thursday, 8 November 2018 - Sydney: The Business Council for Sustainable Development Australia (BCSDA) held a briefing for its members and other members of the business community on the latest developments and application of integrated and climate risk reporting internationally and in Australia.

BCSDA was able to draw on research recently published by the World Business Council for Sustainable Development (WBCSD) and Radley Yeldar for the sixth edition of Reporting matters – WBCSD’s annual review of member companies’ sustainability and integrated reports.

Spanning 158 leading companies from 17 supersectors and 31 countries, this year’s research points to positive progress in corporate reporting and disclosure as well as a continued movement towards digital reporting.

Despite this progress, however, companies still face increased pressure to link sustainability reporting to internal decision-making and performance, the study found.

BCSDA Chief Executive, Andrew Petersen told the briefing, hosted by National Australia Bank, that Australian business is globally aligned and, in some cases, leading the way on integrated and climate risk reporting.

“On climate risk, companies such as BHP, AGL and the Banks are demonstrating leadership, through their involvement in the Task Force on Climate Related Financial Disclosure (TCFD) 1 alignment process,” Mr Petersen said.

“This is providing a positive differentiator in the investor marketplace for these companies,” he said.

“Unfortunately, BCSDA’s recent Mainstreaming Reporting in Australia: Reporting Exchange Report, highlighted a trend that a significant number of ASX300 companies are yet to realise the opportunities that better corporate reporting, or more accurately value driven disclosure, can bring,” Mr Petersen added.

Integrated Reporting involves measuring Manufactured, Intellectual, Human, Social & Relationship and Natural Capital, as well as with Financial data.

Richard Howitt, CEO of the International Integrated Reporting Council, told the Briefing that there is a paradigm shift now underway towards the integration of financial and non-financial information to make it easier for companies to report.

“Changing the entire corporate reporting system across the world is transformational change that will involve many people over several years.  But, it is happening,” Mr Howitt told the Briefing.

“There are now more than 200 pieces of research to show that those companies which adopt a multi-capital or integrated reporting approach get better returns, have a longer-term investor base, have a lower cost of capital and have a higher share price,” he said.

“A recent survey showed that 50% of chief executives are moving towards integrated reporting, with 35% saying they will adopt it,” Mr Howitt added.

Mardi McBrien, Managing Director of the Climate Disclosure Standards Board, said there’s a a need for the accounting profession to respond with resources.

“Pressure is coming from a multitude of directions on climate reporting, with shareholders taking action and asking questions,” Ms McBrien said.

“For instance, a number of auditors are now being called out for their inaction in this area, as the market is demanding more information,” she added.

Mr Petersen said that the opportunity for Australian businesses who embrace integrated reporting is clear.

“Australian businesses that want to attract business and investor interest in their products, technologies and services will need to be disclose how they perform at a more sophisticated level if they want to differentiate themselves from their competitors on factors other than cost,” Mr Petersen said.

“Investors will increasingly play a key role in shifting the financial system to reward the most sustainable companies, ultimately contributing to better management of the world’s natural and social capital resources,” he added.

For further information, contact: Andrew Petersen CEO Business Council for Sustainable Development Australia Ph: +61 (0) 412 545994

About the Business Council for Sustainable Development Australia (BCSD Australia)

Previously known as Sustainable Business Australia, the Business Council for Sustainable Development Australia (BCSD Australia) is the national peak body representing forward-thinking companies and organisations that are working towards the transition to a sustainable Australia. Our mission is to accelerate this transition by making sustainable business more successful. We are the Australian partner of the World Business Council for Sustainable Development and, our members come from all sectors and industries, representing more than 150,000 employees across Australia.

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