Climate Change – Tracking trends in ASX100 climate-related disclosures

18 November 2021

While disclosure of climate-related risks is not mandatory in Australia, the data speaks for itself – there is a trend towards increased disclosure by public companies of these risks. We have conducted an extensive review of the disclosure by the top 100 ASX-listed companies over the past five years, and analysed the extent to which they refer to climate-related risks in public disclosures.We discuss our findings in this article.

The recent UN Climate Change Conference (COP26) in Glasgow reinforced that climate change is one of the greatest environmental and humanitarian challenges facing the global community. The risks posed by climate change permeate through various aspects of business and life, and manifest in the form of physical, liability and financial risks. Corporations now more than ever are readily assessed by stakeholders as to how they address and proactively manage these risks.

In our June 2021 article, we examined recent legal developments regarding the financial risks that climate change poses to corporations and, in turn, to their insurers, particularly directors and officers insurers. In this article, we delve deeper into climate-related financial disclosures, and examine what companies have been disclosing to the market over the past five years.

Disclosure watch – do the ASX100 consider climate-related risks?

Following our analysis of the current top 100 ASX publicly listed companies, whereby we identified whether or not they considered climate-related risks and disclosures in their annual and ESG reports from 2015 to 2020, a clear trend emerged.


As seen in the graph above, between 2015 and 2020, companies have increasingly disclosed climate-related risks, despite there being no mandatory requirement in Australia to do so.

Prior to 2016, only 21 of the current ASX100 disclosed climate-related financial risks. Fast forward to 2020, and 80 ASX100 companies considered climate-related risks in their sustainability, ESG, CSR and annual reports. We also identified several companies who addressed specific climate-related disclosures in a dedicated report, or who referred to the Task Force on Climate-Related Financial Disclosures (TCFD)recommendations (noting that the TCFD has recently released updated guidelines).3 This represents close to a 400% increase in just five years.

What this data indicates is that Australia’s large public companies are opting to voluntarily disclose climate-related financial risks to the market. Boards are acknowledging the potential risks climate change poses to their business, and ensuring that the market is properly informed of these risks. This trend reinforces our view that climate-related financial risks are no longer ‘emerging‘ but are now a ‘real‘ risk for directors and officers and their insurers.4

Our findings also suggest that certain industry sectors are more likely to disclose climate-related risks. We tracked disclosure of climate-related risks in annual reports across the following industries:


Not surprisingly, the data indicates that ASX100 companies with an inherent connection to the climate, such as those in the materials, energy and utilities sectors, tended to disclose climate-related risks earlier in time and have a larger proportion of that sector voluntarily turning their minds to considering climate-related risks and disclosures. Similarly, risk-averse industries such as the financial and insurance sectors have increasingly considered climate-related risks. On the other hand, it is less common for tech companies, based on the data, to address these risks in their annual reports.

Is mandatory reporting of climate-related risks on the horizon?

Insurers should be cognisant of the increase in climate-related disclosures, as with increased disclosures comes greater risk of litigation, particularly if companies cannot demonstrate that they have reasonable grounds for making such statements.5 We saw this with the recent securities class actions commenced against the Oatley Group (the world’s largest oat milk company) and several directors in the United States of America, in which the plaintiffs allege the company engaged in “greenwashing” and made other misleading statements which artificially inflated the company’s share price.

Whilst there is an increasing uptake of the TCFD recommendations, we see the possibility of more standard and comprehensive disclosure practices being introduced in Australia in the future. In June 2021, the G76 announced its support for moving towards mandatory climate-related financial disclosures.7 Reporting on climate-related risks is set to become mandatory in the United Kingdom from 6 April 2022, making it the first G20 country to do so.8 New Zealand also recently passed legislation to mandate climate-related disclosures by large financial institutions9, and Hong Kong is on track to follow suit by 2025.10 There is also a push for mandatory disclosure in other parts of the world, including France and the United States.11 At COP26, 38 jurisdictions (including Australia), welcomed the development of the International Sustainability Standards Board to develop global consistent standards for disclosure of information regarding sustainability.12 What these developments suggest is that the global community is supportive of mandatory disclosure of climate-related financial risks, and it is probably only a matter of time before disclosure of climate-related risks also becomes mandatory in Australia.13

Insurers should be mindful of the direction mandatory disclosures are likely to take in Australia, and the impact this will have on the duties of their insured directors and officers and the associated risk of potential litigation for misleading or deceptive statements or “greenwashing“.14

If the rate of climate-related disclosure continues at the present trajectory, it’s possible the rate of climate-related claims and litigation will similarly increase in the next few years. It is certainly something we are seeing develop in the United States, and time will tell whether this is replicated here in Australia.

This article was written by Jason Symons (Partner), Persia Navidi (Special Counsel), Claudia George (Solicitor), Luke Roper (Solicitor) and Brooke Volbrecht (Law Graduate).

1Our analysis involved reviewing the annual reports and sustainability (and equivalent) reports of ASX listed companies from 2015 to 2020 inclusive. We selected the current top 100 ASX listed companies as at mid-2021, who have been listed on the ASX since 2015. Our review involved a word search for terms related to climate change, disclosure and risks. We assessed companies who referred to climate-related risks as a factor they considered in their overall risk management as having disclosed climate-related risks. We assessed companies with no mention of climate-related risks in any capacity as having not disclosed climate-related risks. We assessed companies who considered climate-related risk and stated it was not a risk to their company as a disclosure of climate-related risks.
2The TCFD is a global advisory body with 32 global members from across the G20. It aims to provide recommendations for more effective climate-related financial disclosures. For more information please see here.
3TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (October 2021).
4HWL Ebsworth Lawyers, Climate Change – The Undeniable Emerging Risk For Directors And Insurers, (30 June 2021).
5Noel Hutley SC and Sebastian Hartford-Davies, The Centre for Policy Development and the Future of Business Council, Climate Change and Directors’ Duties, Further Supplementary Memorandum of Opinion, (23 April 2021).
6The G7 nations comprise of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
7Media release, G7 Finance Ministers and Central Bank Governors’ Communiqué (5 June 2021).
8Press release from the Department for Business, Energy & Industrial Strategy, UK to enshrine mandatory climate disclosures for largest companies in law, (29 October 2021).
9Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
10Securities and Futures Commission, Consultation Conclusions on the Management and Disclosure of Climate-related Risks by Fund Managers, (August 2021).
11Australian Financial Review, Martin Arnold and Patrick Temple-West, Global deal near on forcing companies to disclose climate risks, (2 June 2021).
12Press Release on behalf of the UK COP26 Presidency and the COP25 and COP26 High-Level Climate Champions, Global Finance Ministers Discuss Transition to Net Zero (3 November 2021.
13Australian Financial Review, Michael Roddan, Investor groups demand climate risk disclosure overhaul, (29 June 2021).
14HWL Ebsworth Lawyers, Climate Change – The Undeniable Emerging Risk For Directors And Insurers, (30 June 2021).



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