SYDNEY, March 18, 2024 /PRNewswire/ — Research released today by global management consultancy Baringa shows only a handful of financial services firms are ready for proposed mandatory climate disclosures in 2025.
The research comes ahead of proposed amendments to the ASIC Act and Corporations Act which will require large businesses and financial institutions to disclose how they are quantifying and integrating climate change considerations through their business.
Disclosures will need to sit alongside financial reporting obligations under chapter 2M of the Corporations Act.
"The Treasury is certainly sending a clear message to Australia’s CFOs and CROs," said Chris Nott, a Partner at Baringa in Australia.
"Our analysis shows that while many firms are disclosing widely, they’re not disclosing deeply," he said.
"The better prepared companies are focusing their efforts on the credibility of their disclosures rather than simply just trying to clear the compliance hurdle" he said.
"These new Standards are beginning to drive a fundamental change in financial reporting, and are raising the bar for company directors and executives now accountable for the accuracy and credibility of these disclosures," Mr. Nott said.
The research looked at more than 100 companies, including ASX 200, funds and large unlisted financial institutions. Baringa found while most firms are often disclosing, they lack depth, particularly superannuation and asset management firms. It also found:
Low industry-wide capability to assess financial impacts. Unlisted financial institutions are well behind the curve. Insurers are struggling with climate transition metrics, and transition planning is rare. Large banks have a good baseline to assess climate and financial impacts, however physical risk disclosures require more work. Smaller banks lack detail across the board.
Baringa also identified the most common gaps and obstacles for firms:
Quality quantitative climate scenario analysis. Systems and data which can be leveraged for disclosures and deliver commercial value. Internal alignment, training at Board level and development of enduring capability.
A Bill is expected to be tabled in Parliament in the coming weeks.
Learn more about Baringa at www.baringa.com/en.
About the research
Baringa’s research comprises an analysis of more than 100 Australian financial services firms, including those in the ASX200, as well as large unlisted companies, and large funds.
About Baringa
Baringa is a global management consultancy operating across sectors including financial services, energy and resources, and government.
We set out to build the world’s most trusted consulting firm – creating lasting impact for clients and pioneering a positive, people-first way of working. We work with everyone from FTSE 100 names to bright new start-ups, in every sector. We have hubs in Europe, the US, Asia and Australia, and we can work all around the world – from a wind farm in Wyoming to a boardroom in Berlin. Find us wherever there’s a challenge to be tackled and an impact to be made.
Find out more at baringa.com or on LinkedIn.
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Source : Just 2% of Australia's financial services firms prepared for new mandated climate disclosures
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