Most public companies failing to report on environmental impact

NZX chief executive Mark Peterson said listed companies were under-selling themselves when it came to reporting on environmental and social measures. Photo/Dean Purcell.

New Zealand's publicly listed companies are doing a good job of reporting on their gender balance but have yet to get on board with revealing their impact on the environment or what they are doing to address the impact of climate change on their business.

That's the finding of a new report on the ESG [Environmental, Social and Governance] Reporting Uptake in S&P/NZX 50 Index & Investment Perspective 2019 which looks at the annual reports of New Zealand's 50 largest listed companies.

Of the 50 companies 42 reported on social metrics such as employee gender diversity but only 28 acknowledged climate change.

Most companies did not use a recognised framework or structure for their ESG reporting although those with a high exposure to offshore investors and customers were more likely to do so.

Mark Peterson, chief executive of the NZX, said New Zealand companies were underselling themselves in a global environment where ESG was under the spotlight.

"They are doing great things, but they forget to show measures and effectively talk about it."

Peterson said investors wanted to feel comfortable about where they put their money and that there was a good fit with their personal values.

"That's a huge opportunity for New Zealand businesses – who already have very strong stories – to promote their stewardship of natural resources, how they are looking after the wellbeing of their people and how they respond and innovate around customers' needs.

Peterson said the ability of businesses to prosper over the long-term was materially reliant on a broader confidence, and deeper understanding, that comes from quality ESG reporting on business operations and the behaviours of companies.

It hoped that by releasing the report it would promote greater awareness of the value of ESG reporting.

Nikki Wright, managing director of Wright Communications.

The report was initiated by Nikki Wright, managing Director of Wright Communications.

She said sustainability reporting was becoming the norm in New Zealand although, in terms of quality and depth, the market was lagging other financial jurisdictions.

"While most large listed companies disclose internal measures such as gender balance and internal initiatives to reduce carbon emissions, few disclose in detail their impact on the environment or address the long-term risk of climate change to their business," she said.

Julia Jones, NZX's head of analytics and co-author of the report, said the energy sector had a higher level of disclosure across all ESG metrics, as well as banks and other companies on both side of the Tasman.

But software companies and property companies including the retirement village/aged care sector had the most room for improvement.