The Australian Council of Superannuation Investors (ACSI) recently released Governance Guidelines providing insights for the first time on how large investors expect climate change and human rights issues to be managed.
ACSI’s Governance Guidelines are updated every two years and outline its members’ expectations of the governance practices of the companies they invest in.
This year, a new chapter on environmental, social and governance (ESG) issues has been added, which covers climate change, labour and human rights, corporate culture and tax disclosure.
When it comes to climate change, ACSI expects to understand whether a company can:
- successfully identify and manage the climate change risks and opportunities it faces
- demonstrate future viability and resilience by testing business strategies against a range of plausible but divergent climate futures, including a 2°C scenario
- achieve cost savings through efficiencies and identify low carbon opportunities.
Where companies identify climate change risks as material, ACSI says disclosures should extend to discussing the strategy, as well as metrics and targets, used to manage the risk.