Fifteen per cent, or 30 companies, that are part of the S&P/ASX 200 Index do no reporting of their environmental, social and governance risks, say the Australian Council of Super Investors and the Financial Services Council.
“There is too little information from too few players,” says Ann Byrne, chief executive of ACSI.
Byrne says mining companies such as BHP Billiton Ltd. and Rio Tinto Ltd. are “leading the way” with their environmental, social and governance risks.
The building, construction, manufacturing and energy companies have not provided enough information on such risks, says Byrne.
“If I want to be nasty I might name them in the paper,” she says.
“Mining companies know that better managing the environment helps them make more money and they also know that getting skilled staff leads to higher productivity and greater profit.”
Environmental risks as defined by Byrne include climate change; environmental management systems and compliance; efficiency of waste, water and energy use; the use and effect on the environment of toxins; and the importance of biodiversity.
Social risks include managing people; communication with the community, government and shareholders; as well as not engaging in unethical or unlawful behaviour. Corporate governance includes risk management and remuneration.
“Companies will find analysts want this information,” says Byrne. “Analysts will make it clear that a proper analysis cannot be done without it.”
Byrne says most companies have the information needed to comply with environmental, social and governmental risks but the information is often not shared across corporate divisions.
“The global financial crisis taught us that we have to think of risk more broadly,” she says.
“Are people being paid too much for taking too much risk? If you’re not managing your effect on the environment it may cost you more in the long run.”