Super funds admit skills gap on climate financial disclosures

Mike Taylor

Managing Editor/Publisher, Financial Newswire

1 March 2023

At the same time as the Australian Securities and Investments Commission (ASIC) has initiated landmark legal action against Mercer Superannuation over greenwashing, the superannuation sector has told Treasury there is a significant skills gap on climate-related financial disclosure.

Treasury has issued a consultation paper on climate-related financial reporting and the bottom line messaging from superannuation funds is that, as yet, few of them are adequately equipped to deal with the issue.

What is more, superannuation funds want any reporting standards phased in over three years.

The Association of Superannuation Funds of Australia’s (ASFA’s) response to the consultation paper said that the implementation of international disclosure standards by superannuation funds (and other entities) would not be simple and, in some cases, would require significant changes to business operations and increases in associated operational costs.

“The most significant challenge for superannuation funds relates to the availability and quality of the required data from third parties. With respect to capabilities, superannuation funds, like the broader group of business entities, will need to update, and in some cases develop, systems to collect and process the necessary data and to generate the required outputs for reporting and disclosure,” the ASFA response said.

“The current skills gap is significant. There is a lack of sufficiently skilled people in the global and domestic market, and it will take time to develop and educate the required number of people to support widespread compliance with disclosure standards. This includes internal teams, as well as capacity in third-party organisations that will provide related services – such as modelling and particularly assurance.”

“The significant challenges that superannuation funds (and broader business entities) face around the implementation of international disclosure standards, and the assurance of disclosures, warrants a well-structured phased approach to implementation.”

“In broad terms, ASFA considers that there should be a transition or ‘trial’ period (of two to three years), after the issuance of the final standards where full compliance is not required. As has been the approach with other major policy reforms across financial services, this might take the form of a facilitative compliance period.”

The ASFA response stated that, “in general terms, ASFA considers that there should be a transition period (of two to three years),after the issuance of the final standards where full compliance is not required. As has been the approach with other major policy reforms across financial services, this might take the form of a ‘facilitative compliance’ period”