Benchmarking review of ASX200 Corporate Reporting
Our analysis this year is delivered at an interesting inflection point for the evolution of corporate reporting.
While stakeholder expectations for greater transparency and reporting on the impact of material Environmental, Social and Governance (ESG) matters continue to increase, and international standards setters are moving at a rapid pace to address current deficiencies in standards for sustainability reporting, report producers – corporates – have been occupied addressing challenging geopolitical and economic headwinds, and pausing focus somewhat on ESG matters.
The publication includes the following areas:
1. Analysis and findings from our review of the ASX200 primary reports to their investors, benchmarked against the IFRS Foundation’s Integrated Reporting Framework.
2. Insights from leaders across the ‘corporate reporting supply chain’ on current reporting developments, including ESG developments and the work of the International Sustainability Standards Board.
3. A roadmap to assist organisations re-visit and streamline their corporate reporting to meet current and future requirements in a structured way. The approach outlined aims to reduce the cost of reporting, improve internal processes and practices, whilst enhancing reporting in line with global developments.
The corporate reporting supply chain1 remains clear on the need for robust planning, action and better reporting on material ESG matters and especially climate. They understand global headwinds provide significant and long-term risks and opportunities on the future sustainability of many businesses. These headwinds include the physical and transitional impacts of climate change with increased flooding, fires and other nature-based events; the ongoing impact of COVID-19; and the impact of war and other drivers of geopolitical instability on capital markets, energy availability and pricing, disrupted global supply chains and people. Companies need to manage the impact of these ESG risks and opportunities on their own businesses, and where relevant across their whole value chain, and effectively communicate this to their stakeholders.
of companies are referencing the Integrated Reporting Framework in their primary report to shareholders (2021: 11%).
of companies are reporting on their progress in implementing the TCFD recommendations in their primary report to shareholders (2021:35%).
of companies focused their reporting on value creation for shareholders and/or other stakeholders and not just on historic financial earnings (2021: 70%).
The average number of pages in the primary report to shareholders excluding statutory financial statements and remuneration report remains reasonably concise. (2021: 50 pages).
1 The ‘corporate reporting supply chain’ refers to those involved in the preparation, approval, audit, analysis and use of corporate reports. The process is not linear, rather it starts and ends with investor and other stakeholders, who want to make informed economic decisions about the company and therefore require credible information about enterprise value creation to do so.
Good progress has been made this year to start to standardise ESG and sustainability practices and to develop a framework for a new internationally recognised corporate reporting system which extends beyond financial reporting to provide a more integrated view of how the company creates and maintains enterprise value. Organisations are beginning to take steps toward meaningful disclosures on their business and its ability to create sustainable value now and into the future for investors and other important stakeholders.
The RIAA Benchmark Report Australia 2022 shows that the number of Australian assets managed using a rigorous, leading approach to responsible investment has hit a record value of $1.54 trillion, (2001: $1.28 trillion) now accounting for 43% of the total market.