Australian firms’ climate transition plans deemed inadequate by major investors


Three influential investor networks have criticised the current climate transition plans disclosed by Australian companies, branding them as “incomplete” or “inadequate” for investor needs.

The Investor Group on Climate Change (IGCC), the Principles for Responsible Investment (PRI), and the Carbon Disclosure Project (CDP) are pressing the Australian federal government to set up a “clear framework” for the formulation and disclosure of these corporate climate transition plans.

The three networks appreciate the federal government’s progress towards making climate-related financial disclosures mandatory, with the ultimate aim to fortify climate disclosures across the financial realm through obligatory reporting.

A second consultation on climate-related financial disclosures was inaugurated in June. This follows a preceding consultation that occurred between December 2022 and February 2023.

The Australian government plans for the nation’s climate disclosure standards to align closely with the “IFRS S2 Climate-related Disclosures” set forth by the International Sustainability Standards Board (ISSB).

The IGCC, PRI, and CDP, in their letter to the Treasurer, suggested that the ISSB Climate Standard’s baseline requirements for disclosure should be adopted as an initial measure. However, they believe that more steps should be taken in line with Australia’s climate pledges and the Paris Agreement’s goals.

The three networks highlighted that different frameworks for transition planning have been developed globally, noting the efforts in the UK and the EU.

They also emphasized the importance of harmonisation in order to enable investors with global portfolios to assess progress consistently.

IGCC chief executive officer Rebecca Mikula-Wright said, “They will also need to protect themselves against a myriad of increasing climate risks, and through all that change investors can’t be flying blind.

“To help put capital to work in the right parts of the economy, investors need comparable, reliable, and standards-based transition plans to be part of companies’ mandatory annual reporting.”

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