The risks from climate change are only real for some ASX200 companies

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  • ASIC says climate change is a foreseeable risk facing many Australian listed companies.
  • However, disclosure of this risk is mostly confined to those in the ASX200.
  • Of the 60 listed companies reviewed by ASIC, 17% identified climate risk as material to their business.

Australian companies identifying climate change as a material risk are currently mostly confined to those in the ASX200, according to a review by the corporate regulator, ASIC.

An ASIC report on climate risk disclosure found that more can be done by companies to improve consistency in disclosure practices across listed companies.

The review examined climate risk disclosures by 60 listed companies in the ASX300, in 25 IPO prospectuses, and across 15,000 company annual reports.

Of the 60 listed companies, 17% identified climate risk as material to their business.

Most of the ASX100 companies reviewed considered climate risk to the company’s business to at least some extent.

However, disclosure practices were fragmented, with information provided to the market in differing forms across a wide range of means of disclosure.

In some cases, the review found climate risk disclosures to be far too general and of limited use to investors. Outside of companies in the ASX200, there was very limited climate risk disclosure by listed companies.

“Climate change is a foreseeable risk facing many listed companies in the Australian market in a range of different industries,” says ASIC commissioner John Price.

“Directors and officers of listed companies need to understand and continually reassess existing and emerging risks (including climate risk) that may affect the company’s business — for better or for worse.

“Climate risk disclosure practices are still evolving, not only in Australia but also globally. We intend to monitor market przctice as it continues to evolve and develop in this area.”

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