Finance sector responds to climate change

Australian Banking & Finance, July 30, 2007

Senior finance industry representatives have agreed that the economy-wide costs of ignoring sustainability issues such as climate change outweigh the costs of addressing it and believe further leadership is needed to encourage companies to report on sustainability risks.

That's the conclusion of industry opinion polling released by the Financial Services Institute of Australasia (Finsia).

Releasing the Finsia/Roy Morgan industry opinion poll findings, Finsia's CEO Brian Salter said: "Are we at the 'tip of the iceberg'--can Australian economies afford the economic costs of companies not reporting on sustainability risks such as climate change?"

"The industry opinion poll highlighted that the finance sector broadly supports the UK's Stern Report that 'doing nothing to stop global warming will prove far more costly to the global economy than taking measures in the next 10 to 15 years to fight it'," Salter said.

"The poll is part of Finsia's broader policy initiative, 'Sustaining our Future--investing for the long-haul' which examines the costs/benefits of companies reporting on sustainability risks. Long-term and sustainable investments should be a key factor for industry to consider in terms of protecting the nation's wealth and the retirement savings of all working Australians."

Key findings of Finsia's 'Have Your Say' industry opinion poll include the following:

* A green forecast: economic costs of climate change: 89 per cent of Finsia members surveyed agreed with the broad sentiments of the UK's Stern Report;

* Room to improve: the role of financial markets: 43 per cent of Finsia members surveyed believe that Australia's financial markets overall are factoring certain environmental, social and governance risks into the long-term sustainability of Australia's economy to 'some extent';

* Sustaining the future: company reporting practices: 86 per cent agreed that guidance be provided by an appropriate body (ASX or ASIC) to companies on sustainability risk reporting; 70 per cent supported a voluntary reporting requirement, 54 per cent supported a mandatory reporting requirement and 91 per cent agreed that industry should work towards establishing best practice principles for the disclosure of relevant ESG considerations across different industry sectors.