Almost 70% of medium-to-large Australian organisations claim to disclose their efforts to measure and manage climate risks. The standard of this reporting, however, renders Aussie ESG reports useless, and points to potential greenwashing.
Kearny finds only 35 percent of Aussie companies follow international ESG reporting guidelines. And multiple big-name global research organisations, including PwC and Global ESG Monitor continue to find significant issues with ESG reporting transparency. It’s so bad, Australian ESG reporting standards score just 53/100.
Earlier this year, the Australian Competition & Consumer Commission reviewed more than 240 Australian businesses to find 57% making “false, misleading, vague or unsubstantiated ESG and environmental policy claims.” The ACCC is following up by investigating individual companies for potential greenwashing.
In response, the ACCC has expanded its focus this year from consumer products to misleading ESG claims in manufacturing and energy sectors. Similarly, ASIC has made greenwashing a priority, issuing formal infringement notices and penalties across multiple industries since October ‘22.
Until reporting quality improves, and regulators demand greater transparency, there’s a real risk of greenwashing from companies. Eventually, Aussie companies may be left scrambling to catch up with international ESG standards.
Why Transparency is Critical to ESG Reporting & Greenwashing
ESG Intention vs Implementation
Increasing commitments to sustainability from Australian business leaders bodes well for climate action. Vague metrics and poor reporting standards, however, demonstrate a vast gap between ESG intentions and implementation in Australia.
Indeed, sustainability efforts often bear up-front costs which can conflict with short-term cost savings and revenue goals. Organisations in an ESG limbo are often stuck between announcing sustainability commitments and spending on action.
If inaction continues over an extended time, greenwashing becomes a problem. It’s not only a reputational concern, but greenwashing now carries the risk of financial penalties and litigation. This makes greater transparency critical to establishing trust in a corporation’s sustainability commitments and ESG impact.
ESG Reporting Transparency Ensures ESG Impact
ESG is not a ‘set and forget’ target number. Rather, ESG is a program of continuous improvement. Meaningful ESG action, therefore, demands high-quality data, granular detail and ongoing performance monitoring and reporting.
Indeed, new annual ESG reporting mandates are set to impact most Australian businesses in a rollout starting with large organisations next year.
Transparency Justifies ESG Actions
It’s not just regulators – more than ever before, investors and other stakeholders now expect transparent ESG data to measure and compare company performance.
The task is not easy, however, due to a wide range of ESG approaches and emerging international reporting standards.
In the meantime, while global reporting standards firm up, transparency is essential for stakeholders to understand and interpret company ESG metrics, their impact, and ranking.
ESG Reporting Builds Business Value
In recent years, legal and regulatory frameworks, reporting mandates, and broader ESG reporting standards have strengthened.
Consequently, those businesses that have been slow to commit to an ESG program risk soon finding themselves unable to avoid reporting obligations, and too far behind on transformation to easily jump in.
Not only will these businesses be disadvantaged, playing catch-up, a lack of material ESG action also impacts business value. Those that continue to shirk environmental policies potentially reduce access to capital and economic performance.
Further, internally, leadership on climate action is proven to underpin significant returns; operational efficiencies and cost savings are direct and valuable bi-products of ESG action. And companies with the highest ESG ratings dramatically outperform lower-rated firms in employee productivity.
Externally, meanwhile, more than 60 percent of buyers choose products based on sustainability and ethical criteria. This number grows by 10 percent each year. These customers are also willing to pay premiums of up to 70 percent for products with leading ESG attributes. This is why greenwashing needs to be flushed from Australian corporate reporting ASAP.
Reduce Greenwashing: Improve ESG Reporting Standards
Greater transparency and improved ESG reporting standards can only be achieved with more data. Unfortunately, critical water, gas and electricity data is currently inaccessible to local regulators and decarbonisation solution providers, households and businesses who seek more visibility, control, and analytic capability over their environmental impacts.
It’s because Australia’s infrastructure remains dominated by analogue utility meters. And the cost to digitise using smart meters is in the billions of dollars – and, at earliest, only implemented nationally in 2030.
Meanwhile, climate change is not waiting for smart meters. And Aussies can’t wait any longer for our data, which can be used for a multitude of value-building and cost-cutting programs. Data an essential ingredient to meaningful ESG policies and reporting. It’s necessary to trade carbon credits or ACCUs, to satisfy ESG reporting mandates and to empower households to become part of the ‘people powered’ transition to 100% renewables.
In the meantime, SNAPI is digitising analogue utility meters at scale by slashing the time, cost and complexity of digitisation. It does this with an AI-powered digital meter reading device which snaps on to existing infrastructure to instantly start to remotely transmit a water, gas or electricity meters with a reading accuracy of 99.9%. By simplifying the installation process, reducing loss on installed assets and slashing digitisation costs on hardware, downtime and installation services, SNAPI represents rapid access to reliable data.
Until utilities can make accurate consumption data more readily available – and at scale to businesses and households – Australia continues to miss opportunities for energy efficiency and cost savings, and our contribution and commitments to state, national and global net zero targets remains questionable.