CA ANZ study finds almost a third of Aussie companies are already disclosing their climate risk

Exposure to climate-related risks as well as noting how risks are factored into cashflow projections is now common for over a third of Australian companies.

Investors increasingly want greater transparency and consistency over a company’s exposure to climate change-related financial risks. Picture: Nikki Short

Almost one in three Australian companies now make ­disclosure about their climate “risks” ahead of the introduction of mandatory ­reporting requirements, a ­study has found.

Data released by Chartered Accountants Australia New Zealand shows the number of companies issuing disclosures has increased since 2021 to almost one in three.

The results of the study, prepared in co-­operation with The University of Melbourne and University of Queensland, show Australia is tracking in line with the rest of the world for climate impact ­reporting.

CA ANZ found the main areas reported by companies were impairment of non-current assets due to climate-related risks.

The report found this also included disclosures of the exposure to climate-related risks as well as noting how risks were factored into cashflow projections.

CA ANZ reporting and assurance leader Amir Ghandar said climate change was clearly concerning corporate Australia over future asset values, provisions, ­financial risks and impairment testing.

“As you would expect, emissions-intensive industry sectors such as energy and utilities have a larger proportion of companies impacted, but we’re also seeing sectors such as consumer staples and financials calling out climate risks as a key financial consideration,” Mr Ghandar said.

“These results demonstrate the impacts of climate risk as a ­financial issue, and investors have increasingly been calling for greater transparency and consistency.”

CA ANZ found that financial statements were also reflecting the climate risk to critical ­accounting estimates and environmental restoration provisions.

But it found that disclosures of climate-related risks under “financial risks” had slid from a peak of almost one in five companies to one in seven.

“This includes disclosures regarding how climate-related risk affects the expected credit losses of loans and investments, and of how the company manages its exposure to climate-related risks in relation to financial instruments,” the report noted.

The report comes on the eve of the potential introduction of mandatory climate reporting for some of the nation’s Australia’s biggest companies.

The federal government revealed in January its plans to require companies with revenues of $500m and above to report climate related matters from July 1.

Smaller companies with a turnover of $200m would start reporting in 2026, and those with $50m in 2027. Asset managers with more than $5bn under management will begin reporting from July 1, 2026.

Mr Ghandar said there was no doubt behind the motivations of the government’s climate-related financial disclosure bill.

“Robust assurance will be essential to achieve the level of integrity and investor confidence needed for these new disclosures,” Mr Ghandar said.

However, the preferred model proposed by Treasury would give companies until 2030 to provide assurance for their claims, in a bid to allow the audit and assurance industry time to prepare.

Originally published as CA ANZ study finds almost a third of Aussie companies are already disclosing their climate risk