Greenhouse gas emissions have toppled governance as the number one priority for ASX-listed companies, according to a new survey by investment firm, Perennial Partners.

Diversity moved to second place from third in 2020, leapfrogging governance which slid down to third. Of all the sectors, REITs rated sustainability the highest in importance at 9.7 out of 10, followed by building materials at 9.2 and utilities at 8.3.

The results of the survey, which is in its third year, also pointed to more tangible actions taking place on ESG beyond just formal recognition.

All up 38 per cent of companies said they measured and disclosed Scope 1, 2 and 3 emissions, while 33 per cent did so for scope 1 and 2, and 12 per cent did not all. Less than half, or 40 per cent had emissions targets that aligned with the Paris Agreement.

Meanwhile 38 per cent of companies had a target for reducing water use and 57 per cent had a target for reducing or improving waste management. These were up from 32 and 53 per cent respectively in 2019.

More than 88 per cent of companies that responded had a board member or senior executive responsible for ESG, and a further 81 per cent had a business strategy that specifically referenced ESG and sustainability.

This was true for both large and smaller companies, and of those that did include ESG in their strategy, 80 per cent reported seeing positive business outcomes. In addition, 93 per cent said engaging with investors on ESG and sustainability issues was beneficial to the company.

“This year’s results revealed the pandemic has not stopped boards and senior management seeking to improve ESG practices and policies,” said Emilie O’Neill, co-head of ESG for Perennial’s sustainability fund.

“This demonstrates Australian companies are starting to come to grips with the urgency and opportunity of acting on climate risk.”

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