ABC economists predict that stronger and better climate information from Australian businesses will lead to more sustainability initiatives
Juan J. Monroe 
In 2020, a record 80 ASX200 companies adopted the TCFD framework for climate risk reporting. Another 34 companies have committed to or are in the process of reviewing the framework – the preliminary steps to publishing their own TCFD disclosures.
“Support for the TCFD framework has accelerated rapidly in Australia and overseas, with the number of companies endorsing the TCFD recommendations more than quadrupling over the 2017-2020 period,” said Economist Carol Kong. of the ABC, author of the report. .
A shift to mandatory reporting could incur compliance costs, but voluntary adoption of disclosures is expected to continue without regulatory action, Ms. Kong said in the report.
“The rapid adoption of climate reporting has come despite the fact that many jurisdictions, including Australia, have not made such reporting mandatory,” Ms Kong said. “Instead, companies are choosing to improve their financial and risk information to meet the strong interest of stakeholders, including investors, employees, business partners and customers,” she added.
Currently, about half of ASX200 companies report Scope 1 emissions, which come from sources controlled by the organization, such as owned facilities and vehicles, and Scope 2 emissions, which are indirect emissions related to purchase of electricity, steam or cooling for their own account. utilize. However, only half of these companies use an independent third party to audit or verify their reported emissions.
Scope 3 emissions, which come from sources outside the company’s control, such as suppliers, are more difficult for companies to report. Key to this challenge is access to relevant data, Ms. Kong said in the report.
However, as more companies step up their Scope 1 and 2 reporting, the growing amount of climate-related information will make Scope 3 reporting more accessible, Ms. Kong. As companies dig deeper into their supplier data, they are more likely to partner with their suppliers to find ways to reduce emissions, Ms. Kong says.
“We expect more Australian companies to introduce or reassess their emissions reduction targets, and in particular, we expect more companies to set targets that meaningfully address Scope 3 emissions as accounting and reporting continues. market-wide emissions reporting are improving,” she said.
