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ASX companies take action on ESG and sustainability

Yasmine Masi7 October 2021
Shovel digging up grass

ASX listed companies have shifted from awareness to action on Environmental, Social and Governance (ESG) and sustainability, according to findings from the Perennial Better Future Survey.

 The survey conducted an ‘ESG pulse’ check on Australia’s listed companies, to gauge where they have been, where they are and where they are going regarding ESG. For the first time since the survey’s inception, greenhouse gas emissions, including alignment with the Paris Agreement, was listed by respondents as the biggest area of focus and improvement. Diversity and governance were shuffled to second and third place, respectively.

“Against the difficult backdrop of COVID-19 and all the challenges it has presented, ASX respondents said greenhouse gas emissions will be the number one priority in the next 12-18 months,” said Emilie O’Neill, Perennial Better Future’s Co-Head of ESG.

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

The results of this year’s survey continued the trend of ESG’s importance for Australia’s listed companies and pointed to an increase in them taking tangible actions. More than 88% of respondents confirmed their company had a board member or senior executive responsible for ESG, and 81% said they have a business strategy specifically for ESG and sustainability.

“Given the likelihood of greater investor and other stakeholder interest in relation to ESG matters, we look forward to continuing to track how ASX companies progress,” said Damian Cottier, Portfolio Manager of the Perennial Better Future Strategies.

“We will continue to engage with companies to encourage them to play a greater role in positively shaping a better future,” he said.

The survey’s findings also highlighted that 80% of companies said they are seeing real-world results from focusing on ESG and sustainability, and 93% confirmed their engagement with investors on ESG and sustainability issues is 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,” O’Neill said.

The research also revealed some emerging social issues are on the radar for Australia’s listed companies. The results highlighted that industry difficulties in attracting a gender diverse talent pool were the top inhibitor for companies to achieve a gender diverse workplace. Increasing gender diversity in senior and entry level positions has also been a focus for ASX companies.

Cybersecurity was a new option in this year’s survey and ranked equal third with modern slavery, a sign of issues that will become more material in the coming years.

“Cybersecurity has emerged as a critical issue for companies, a concern heightened by the shift to remote working during the pandemic,”O’Neill said.

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