As investors and stakeholders increasingly couple the value of a business with its ability to navigate climate risk and opportunities, companies across Asia Pacific are showing progress in their sustainability reporting around these areas. This is according to Sustainability counts II: Sustainability reporting in Asia Pacific, a study by PwC Singapore and Centre for Governance and Sustainability (CGS), National University of Singapore Business School.
Analysing the sustainability reports of the top 50 listed companies by market capitalisation across 14 Asia-Pacific jurisdictions1, the study further reveals that critical reporting and disclosure gaps remain for businesses, to demonstrate that they have a viable and robust pathway to reach net zero by 2050, and highlights the evolving challenges facing businesses ahead.
“As expectations for ESG rise, companies must prioritise resolving these gaps and make the necessary resource commitments. They can then serve as exemplary enterprises on a successful green journey, embodying accountability and resilience,” says Professor Lawrence Loh, Director, CGS.
Progress shown in climate-related risks and opportunities disclosure
The study indicates a rise in the disclosure of identified climate-related risks and/or opportunities in companies’ sustainability reporting, from 77% in 2021 to 88% in 2022. This goes hand-in-hand with their disclosure of processes for managing these risks and/or opportunities, from 66% (2021) to 74% (2022), and how they integrated climate-related risks into their overall risk management, from 36% in 2021 to 58% in 2022, for the 13 jurisdictions with the exception of South Korea. The climb in the disclosure rate can be attributed to the increased adoption of the Task Force on Climate-related Financial Disclosures (TCFD) framework, where the disclosure of integrating climate-related risks into overall risk management is one of the reporting components. At the same time, the findings suggest that compared to a year ago, companies are increasingly readjusting their business strategies and models to mitigate current climate issues and evolving stakeholder as well as regulator expectations.
The state of sustainability reporting assurance
The study saw an increase in companies obtaining external assurance from an independent party for their ESG disclosures, up from 37% in 2021 to 49% in 2022. Considering that three-quarters of investors polled in a recent Global Investor Survey by PwC indicated that their confidence in sustainability reporting would receive a bigger boost if it were assured at the same level as the company’s financial statement, businesses would do well to build a higher degree of credibility around their sustainability reporting through obtaining external assurance.
“The challenges businesses face around the interoperability of key sustainability reporting standards, and across multiple jurisdictions, will require companies to develop a strategic roadmap and an operationalisation plan, while prioritising assurance in sustainability reporting to address rising expectations from investors and stakeholders,” says Fang Eu-Lin, Sustainability and Climate Change Leader, PwC Singapore.
1 Australia, China (mainland), Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, Vietnam
This article was first published by ISCA at the following URL: https://journal.isca.org.sg/2023/06/28/overall-progress-in-sustainability-reporting-but-critical-gaps-remain/pugpig_index.html
