• Quarter of companies reported no material exposure to environmental and/or social risks.
  • Reporting on diversity policies remains static over last six years.
  • Modest increase in women on boards, fall in general workforce, executive roles since 2015.

Modest increase in women on boards, fall in general workforce, executive roles since 2015. Reporting on diversity, equity and inclusion among ASX-listed companies has stalled, and a sizeable number claim they have no material exposure to environmental or social risks, a major KPMG Australia study of the adoption of the ASX Corporate Governance Council’s new and amended fourth edition of the Corporate Governance Principles and Recommendations has found.

KPMG carried out the research for the ASX Education and Research Program based on publicly available reporting of just under 600 ASX-listed entities, covering three categories: S&P/ASX 200; the ASX 201-500 category, and the ASX 501+.

Today it publishes three reports analysing disclosures on: overall adoption of the Principles and Recommendations ; diversity, equity and inclusion; and environmental and social risk. In 2016, KPMG carried out a similar report for the ASX on diversity reporting, from which comparisons can be made.


Main findings:       

  • There has been only a fractional rise in the number of ASX entities disclosing a diversity policy in the past six years, with 88 percent in 2021 compared to 87 percent in 2015.
  • Across all three ASX categories assessed, there has been a regression in disclosures on the proportion of women in at least one of the categories of general workforce, senior executives and board.
  • Overall, the proportion of women in senior executive roles, and the workforce generally, has remained largely stagnant, but the number of women on boards has increased by 10 percentacross all three categories since 2015. (for ASX200 companies 12 percent, with a 4 percent rise in senior executive roles).
  • The ASX 501+ cohort requires the most support and focus to develop and implement diversity initiatives, with the lowest rates of disclosure and proportion of women, and highest use of the ‘if not, why not’ exception.
  • Over one-third of entities recognised the benefits to having a diversity policy in their reporting.
  • Some companies go beyond gender and include a broader definition of diversity in their disclosures. But only a small percentage of entities yet disclose measurable objectives for, or representation of, First Nations Peoples, those who are culturally or linguistically diverse, people with disabilities, or members of the LGBTIQA+ community.

Dr Meg Brodie, KPMG Partner, Human Rights & Social Impact, said: “Our analysis shows that further action is needed to address the more than one in 10 companies that are still not disclosing a diversity policy. We are also seeing a stagnation in the proportion of women in senior executive and board positions, and across the workforce in general. Although the COVID-19 pandemic is likely a contributing factor, it is disappointing to see such slender progress over six years.

“The good news is that over one-third of entities reported benefits to having a diversity policy, with some variation by industry. Those entities recognise that having and implementing a diversity policy is not just the right thing to do but also generates multiple benefits for the business including increased talent attraction, retention and better business performance to name a few. Even better, we’re seeing encouraging signs of reporting on diversity beyond gender, pointing towards the next wave of responses to diversity, equity and inclusion needs.

“The most common reason given for not disclosing a diversity policy or measurable objectives is the size of the entity and/or the size of its workforce. The question, therefore, is what effective support do smaller listed enterprises need to take the next step on diversity?”

Environmental and social risks – Recommendation 7.4

Main findings:

  • While the adoption of the Recommendation was high, over a quarter of companies reported no material exposure to environmental and/or social risks.
  • While acknowledging there is a significant breadth of entities with different circumstances and exposures within the sample, KPMG considers it unlikely that over 25 percent of the sampled entities did not have any material social or environmental exposures.
  • The most common environmental exposures included climate change and related impacts, biodiversity and water scarcity, while the most common social exposures included community engagement, diversity, equity and inclusion, and health and safety.
  • Reporting frameworks and standards were referenced to varying degrees. Around half followed at least one internationally recognised framework. Overall KPMG observed a maturing of reporting, especially among the ASX200

Julia Bilyanska, KPMG Partner, ESG Services, said: “Many of the companies using the ‘if not, why not’’ explanations said that their sector either has little exposure to material environmental and social risks, or that their company had a diverse portfolio of investments which shielded it from those risks. Yet a review of sector-specific reporting identified some instances of entities reporting no material exposure to environmental and social risks and being out of step with companies in the same industry.

“Investors and regulators are taking a keen interest, and sustainability reporting standards are being developed at a global level - with the prospect of them being made mandatory in Australia – so all ASX-listed entities need to take a fresh look at their reporting in this area. This study suggests that while two-thirds reported material exposure to environmental and social risks, others need to reconsider their assessments in the current climate and look at approaches taken by peers.”

Adoption of 4th edition Corporate Governance Principles and Recommendations

High levels of adoption of new and amended fourth edition Recommendations was noted, with 95 percent of the sampled companies disclosing the extent to which they had adopted the new and revised requirements.

The depth of disclosure varied however, with some entities providing responses that simply restated Recommendations without explanation. For example, a majority of the companies reviewed did not specify who conducted verifications of the integrity of periodic corporate reports (that were not audited or reviewed by an external auditor), nor called out how verifications were undertaken.

Julia Bilyanska said: “Overall, there was high adherence to the new and revised fourth edition Recommendations and many examples of good practice were identified, which others could use to advance their own practices and disclosures to the extent that is fit for purpose. For example, thematic reporting on breaches of codes of conduct, whistle-blower policies and anti-bribery and corruption policies to enable proactive governance focused on preventing breaches becoming material in the future.”

Elizabeth Johnstone, Chair of the ASX Corporate Governance Council, said: “The Council is constantly considering evolving governance expectations and is discussing a possible fifth edition of the Principles and Recommendations. These reports will greatly assist the Council in those discussions.”

Janine Ryan, ASX’s Chief Compliance Officer, said: “The three KPMG reports provide valuable insights into how ASX-listed entities are meeting their ‘if not why not’ reporting obligations under the fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations. They enable listed entities to benchmark their governance disclosures against their peers and provide practical observations on how reporting can be improved.

“The reports will also contribute meaningfully to the discussion about diversity, environmental and social risk disclosures, which is an area of great interest to investors and the broader community. The reports are intended to help listed entities prepare governance disclosures that will assist investors to make informed decisions.”

Notes to editors

The KPMG studies published today follow two similarly commissioned studies on diversity done by KPMG in 2016 and 2014 on the adoption of previous editions of the Principles and Recommendations. This is the first time the research has expanded to include a report on environmental and social risk.

KPMG carried out the new research for the ASX Education and Research Program based on publicly available reporting across a large sample of ASX-listed entities. The three reports analysed disclosures on the new and amended fourth edition of the Recommendations, which took effect for financial years commencing on or after 1 January 2020. 

For further information

Ian Welch
KPMG Communications
0400 818891