Superannuation funds want Australian Securities Exchange (ASX) listed companies to improve their reporting of environmental, social, and governance (ESG) risks after finding 13 per cent fail to provide meaningful information.
While the ASX has no mandatory requirement for listed companies to report sustainability factors, Australian Council of Superannuation Investors (ACSI), chief executive, Louise Davidson, said it was important for investors to be able to assess risks when making long-term decisions.
"As institutional investors, ACSI members, as well as other investors, need to price and evaluate these risks if they're to protect and manage their investments for the long-term," she said.
"For that that to happen effectively, companies need to not just list those risks, but explain how they're managing them.
"This is something ACSI has long been aware of, and active in, for many years. We've monitored the sustainability reporting of ASX100 companies since 2008, and the ASX200 since 2009.
"Year-on-year our Sustainability Reporting research has shown a continuous progress in reporting, but there's still room for improvement."
Davidson said a guide developed with the Financial Services Council (FSC) would help companies to provide investors with the information they need to make decisions based on ESG risks.
FSC chief executive, Sally Loane said, "shareholders and analysts are increasingly focusing on ESG reporting to gauge companies' performance beyond traditional financial data".
"As our $2.6 trillion funds management industry continues to grow — underpinned by $2 trillion in superannuation — investment managers are increasing their level of scrutiny on ESG risks as a risk management process and a measure of a company's value," she said.
"This is an important governance measure that will benefit consumers in the long-term."