Late last year, the Treasurer Jim Chalmers, unveiled plans to make companies disclose climate change related risks to investors. Whilst these requirements will first be imposed to large companies and parts of the public sector, they will likely form part of a larger agenda to tackle “greenwashing” in financial markets.
Greenwashing is the practice of misrepresenting the extent to which a product, company or strategy is environmentally friendly, sustainable or ethical.
Research shows that more than half of all ASX 200-listed companies disclosed at least some climate change related information to investors, and about 70% of these companies have agreed to a net zero greenhouse gas emissions target.
Whilst further consultation is planned by the Treasurer in 2023, ASIC has issued its first penalty for greenwashing, fining an ASX-listed company $53,280 for making alleged false or misleading sustainability-related statements to the ASX.
Meanwhile, the ACCC is also getting in on the action, with reports that it has begun a crackdown of its own, identifying companies making false claims about environmental action. This follows a global investigation that found as many as 40% of environmental claims may be fraudulent.
At Prosperity, we are staying close to these developments as business advisers, financial reporting preparers and auditors will all be uniquely placed to navigate the new requirements and compliance landscape.
If you have any questions regarding the above, please contact Director of Corporate Assurance Alex Hardy on (02) 8262 8700 or ahardy@prosperity.com.au.
Sources:
[1] McLeod, Catie - Companies face climate risk disclosure rules under Labor’s ‘ambitious’ strategy – 11/12/2022
[2] Cox, Lisa - Australia’s corporate regulator issues first fine for greenwashing – 27/10/2022
[3] Hannam, Peter - ACCC begins ‘greenwashing’ crackdown on companies’ false environmental claims – 11/10/2022
