Australian regulators step up climate disclosure oversight

The securities regulator is taking a close look at the potential for "greenwashing". PHOTO: REUTERS

MELBOURNE (REUTERS) - Australian regulators are increasing their oversight of climate change reporting by listed companies and financial institutions, the regulators said this week.

The securities regulator is taking a close look at the potential for "greenwashing", a practice where firms embellish their corporate, social or environmental credentials, while its banking regulator is finalising guidance on management of climate risk.

While Australian companies have improved their climate change reporting over the past three years, a disparity in global reporting standards has left gaps, the Australian Securities and Investments Commission (Asic) said.

"Asic is cognisant that current investor focus on climate change and climate action may provide incentives and opportunities for companies to engage in greenwashing," Asic commissioner Cathie Armour said on Thursday (June 3).

This has come at a time "when climate-related disclosures are not standardised, making it difficult to compare companies, products and environmental impacts", she told a Minerals Council of Australia forum in Canberra.

Some 58 per cent of the top 100 listed companies in Australia follow the Taskforce on Climate-related Financial Disclosure, up from 16 per cent three years ago, she said, citing a report by professional services company KPMG.

"For example, it may be problematic or potentially misleading for companies to make representations about achieving carbon neutrality or net zero if those representations are not supported by a reasonable basis," she said. "We plan to continue to monitor this area."

Asic's efforts come as Australia's banking regulator finalises its guidance around the prudential management of climate risks.

The guidance covers aspects of governance, strategy, risk management and disclosure, Mr Wayne Byres, chairman of the Australian Prudential Regulation Authority (Apra), said this week.

"The guidance does not tell financial institutions where to lend, what to insure or how to invest. Its goal is simply to make sure those decisions are well-informed with respect to climate-related risks," he told a Senate committee.

The guidance is out for consultation until July 31 and Apra plans to have a final version ready by the end of the year.

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