New report reveals Australian companies’ mixed messaging on carbon neutrality

New report reveals Australian companies’ mixed messaging on carbon neutrality

A new report has revealed a rising trend in reporting on the Sustainable Development Goals by Australia’s top 150 companies, but their disclosure on climate action and carbon neutrality intentions lack clarity.

Key findings

  • Number of companies incorporating SDGs in business performance targets has almost doubled since 2019
  • Disclosure levels on how Australian businesses set and track appropriate performance targets and indicators for SDGs remain limited
  • 42% of ASX150 have pledged to achieving carbon neutrality, with 11% (17) already achieving this
  • Number of companies reporting on their SDG prioritisation has grown from 25% in 2018 to 59% in 2020

The research study from RMIT University and CPA Australia on the top 150 Australian public-listed companies (ASX150) looked at sustainability report data from 2018-2020.

The findings indicated that the extent of awareness, commitment and governance support for the SDGs has substantially improved, indicating Australian companies’ growing commitment, greater transparency and accountability towards sustainable development. 

But lead author Professor Nava Subramaniam cautioned that companies still need to be held accountable to their espoused commitment to sustainable development.

“Greater assurance is needed on the connectivity between business activities identified as sustainable, and their impact on the Sustainable Development Goals,” said Subramaniam, Deputy Dean of Research and Innovation at RMIT’s School of Accounting, Information Systems and Supply Chain.

“For example, we identified a number of ASX150 companies that prioritise SDG13 Climate Action but remain silent on their commitment to carbon neutrality. 

“While there are expectations that companies prioritising SDG13 Climate Action would be more transparent on their stance on carbon neutrality, not all are meeting this requirement.”

The new report found greater transparency on climate action disclosure is needed by Australia's top companies. The new report found greater transparency on climate action disclosure is needed by Australia's top companies.

CPA Australia Chief Executive Officer Andrew Hunter said: “Australia has an opportunity to ‘build back better’ by embedding sustainability principles into our post-COVID economy. This requires a shared effort, and listed companies have a large part to play.

“Although uptake of the Sustainable Development Goals is growing, it’s still concentrated at the top end of the ASX.

“Our goal is to see these principles penetrate further into the index.

“We’re calling on the SDG laggards to embrace a sustainable post-COVID economic transition, rather than merely being an unwilling participant.”

Subramaniam  said the voluntary nature of reporting and the lack of a systematic approach to linking business goals with the SDGs results in lower consistency in SDG prioritisation and reporting across the board.

 “There are a number of reporting frameworks and guidelines including the GRI standards that companies can adopt for sustainability reporting,” she said.

The report also highlighted the increasing disclosure requirements relating to risks associated with human rights, gender inequality, climate change and more faced by Australian companies.

These requirements have been brought about by regulatory developments and initiatives such as Australia’s Modern Slavery Act 2018 and the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD).

Many of these issues overlap with the SDGs and require Australian businesses to invest in reliable and effective sustainability reporting systems.

Hunter said: “Sustainability has a material impact on companies’ financial performance and prospects. The accounting profession has a responsibility to ensure the transparency and disclosure of sustainability risks.

“This report will help accountants, investors and others understand how companies are embedding sustainability principles into their operations.”

Download the report: SDG measurement and disclosure 3.0: A study of ASX150 companies

Story: Kate Milkins

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