ASIC raises the heat on greenwashing IPO hopefuls

Ms Armour said ASIC was looking forward to the release of new guidelines by the International Sustainability Standards Board, which was established at the recent COP26 summit in Glasgow. The ISSB would build upon those guidelines set out by the Taskforce on Climate-related Financial Disclosure, to help companies and investors navigate ESG disclosures.

“[The ISSB] is working first to meet the urgent demand for transparent and comparable reporting and climate-related matters, with the aim of publishing a climate standard in 2022, probably the second half of 2022,” Ms Armour said.

The ISSB would consider all international standards and bring together a comprehensive set of guidelines for global markets, she said.

REA Group chief financial officer Janelle Hopkins, who also chairs CFO industry body the Group of 100, said reporting of climate risk and strategy was a challenge for companies and would put strain on finance executives.

“The level of different frameworks that are out there, all the non-financial information that we are going to be providing to the market, then auditing of all of that, there’s actually going to be a substantial amount of work that’s going to be put onto the accounting and finance profession to be able to make sure we can transparently share what we are doing around climate change and talk to our stakeholders about that,” she said.

BHP chief financial officer David Lamont agreed climate risk and the company’s decarbonisation progress were front of mind for investors. “There’s not an investor call that I have now that it doesn’t come up in relation to decarbonisation, and where are we heading in relation to our targets,” he said.

BHP wants to reach net zero emissions by 2050 and reduce operational emissions by at least 30 per cent from their 2020 level by 2030.

“We need about $2 billion to $4 billion [of investment] in helping us decarbonise and get to our 2030 targets,” he said, adding the targets had been approved by shareholders.

Despite the cost, BHP says the global energy transition is a net positive for the miner because demand for nickel and copper needed for batteries and electrification will rise.

ESG’s role in decision making

Richard Sleijpen, the Australasia head of global capital markets for investment bank UBS, said ESG considerations are increasingly a factor for institutional investors in deciding whether to back a buyout deal.

“All investors now have ESG framework as part of their decision-making process with very few, if any exceptions,” he said.

Mr Sleijpen said more capital was being directed to deals where sustainability measures were factored into future growth plans.

“There is also an increasing pool of capital which is investing with less financial hurdles, and more focus on whether it’s the sustainable development goals of the UN [United Nations] or other impact type of measures that they’re using to justify their investment,” he said.

Mr Sleijpen said the influence of index funds and “quant” funds which use trading algorithms to invest, was rising and they now made about one-third of a share register usually in the ASX200, compared with 17 per cent a decade ago.

Those funds were much more on the front foot in engaging with companies on their ESG positions, and companies needed to make sure they spoke to them regularly.

Warning to finfluencers

The ASIC commissioner also warned CFOs on collaborating with financial influencers on social media, known as finfluencers.

“If you’re approached by a finfluencer, seeking to collaborate, or you’re considering reaching out to one, please make sure you do your due diligence as they may be contributing to your regulatory risks,” she said.

“We’ve enhanced our surveillance capacity capability across social media, so we can quickly identify pump-and-dump activity and instances of unlicensed advice.”

Ms Armour also reiterated calls to market participants to be ready to trade via alternative venues to the ASX in the event of a future outage, emphasising the likelihood of “hiccups” as the market operator embeds the distributed ledger technology-based CHESS replacement in 2023.

“We’re expecting market operators and participants to implement the measures set out in this report to ensure that they’re meeting their obligations under the corporations law. Critically the expectations require market participants to have the certainty and ability to trade on alternative venues in the event of a future market outage,” she said.