Reporting season is starting to gain momentum, companies are publishing their financial outcome, and Annual and Sustainability Reports are coming thick and fast. We are analysing these reports as they come available, and both augmenting our database of reports, as well as updating our reporting heat map. Our proprietary AI engine has been built to extract a standard dataset from the reports. This allows us to develop a detailed database of what is, and what is not, being disclosed. in support of our advisory work for you. The possibilities to query the data set are almost limitless, for example we can tell you how many companies have disclosed a carbon price, what scenarios have been used, and when and how the financial impacts of climate change have been estimated.  

This standard dataset also allows us to look at how disclosures are developing, where in the market strengths lie, and where there is room for improvement. In order to do this, we have developed an approach to assessing reports based on completeness and quality. The outcome of this assessment for the first reports in the market earlier this year is included below.

This result shows that, in the main, reports are done well, which is to be expected given that the reports have all passed audit and board scrutiny. Across the board Governance as a pillar is strong, with Risk being addressed almost as well. As reports delve into the technical details of Strategy and Metrics and Targets they become less robust. We also see a difference in sectoral responses, Energy and Mining, who have faced significant shareholder pressure on their climate performance in the past, have rigorous disclosures. Other sectors are less mature in this area. The result for the finance sector is surprising, however none of Australia’s largest banks have published their ASRS aligned disclosures yet and so we do expect a change to this result as more reports come available.  

It was possible to extract clear themes from this analysis, as summarised below:

Disclosure strengths  Opportunities for improvement 
  • Strong governance disclosure
  • Risk identification and enterprise risk integration
  • Scenario analysis coverage and alignment
  • Scope 1 & 2 emissions measurement and assurance
  • Policy alignment and regulatory framing
  • Transparency about current limitations
  • Financial quantification of climate risk
  • Linkage to financial statements
  • Scope 3 emissions measurement
  • Climate‑aligned capital allocation
  • Revenue / scale context
  • Quantified scenario outputs
  • Metric consistency
  • Execution detail behind targets 

While there are not yet enough reports in the market to update these analyses, we have assessed the reports currently available. They follow the same maturity curve of Governance (83%), Risk Management (70%), Strategy (67%) and Metrics and Targets (61%). Strengths and opportunities for improvement are along the same themes, but a bit more granular given the smaller sample size.

Disclosure strengths  Opportunities for improvement 
  • Board oversight and accountability
  • Defined governance and committee structures
  • Management roles, controls and reporting lines
  • Identification of climate risks and opportunities
  • Use of board skills matrices and capability disclosures 
  • Transition plans not sufficiently developed
  • Limited quantification of financial impacts
  • Weak Scope 3 and value-chain analysis
  • Scenario analysis not decision-useful
  • Limited climate-linked remuneration
  • Enterprise Risk Management integration not fully demonstrated 

There was an interesting mix of governance structures and processes in this cohort of reports. We did a deeper dive into this aspect of climate risk identification and management and came to the conclusion that there are some steps that can be taken to strengthen this organizational aspect.  

Common governance elements that you might consider for review are listed below:

Area Current State  Leading Practice
Remuneration ESG broadly referenced   Climate-specific KPIs disclosed 
Accountability Board oversight Named executives or executive roles accountable 
Capability Skills matrix Skills matrix,training and competency assessment 
Disclosures  A focus on qualitative Quantified performance outcomes

We will continue to update our analysis and let you know what we are finding. When the sample size is large enough we will also extract sectoral results, so watch out for our assessment of disclosures across Mining, Energy, Infrastructure, Finance, and Property and REITs in coming weeks.  

If there is something specific you would like us to add to our assessments let me know; and as always, please reach out if you would like to talk through the details of our work helping you to deliver ASRS disclosures across the Australian economy.