Following an ASIC review, Namoi Cotton Limited (Namoi Cotton) and Fluence Corporation Limited (Fluence Corporation) have disclosed a diverse range of material business risks, including sustainability-related risks.

In particular:

• Namoi Cotton made disclosures as part of its AGM shareholder presentation on 19 July 2023; and
• Fluence Corporation made disclosures as part of its quarterly business update on 31 July 2023.

The disclosures were made in response to ASIC’s concerns that the risks had not been sufficiently disclosed in the operating and financial review (OFR) of the directors’ report, following ASIC’s ongoing financial reporting surveillance program and subsequent inquiries into a selection of recent annual reports.

ASIC Commissioner Danielle Press said, ‘One of ASIC’s strategic priorities is to support market integrity through the proactive supervision and enforcement of governance, transparency, and disclosure standards in relation to sustainable finance. Directors must provide investors with useful and meaningful information to help them make informed investment decisions.’

Recently, the International Sustainability Standards Board (ISSB) published its inaugural standards, and in Australia, Treasury consulted on the introduction of mandatory climate-related financial disclosure for large business and financial institutions.

‘As the regulatory regime for disclosing sustainability-related risks develops, it is important to maintain market integrity and for entities to prepare for mandatory reporting changes. If not already doing so, ASIC encourages directors to voluntarily report in line with the Task Force of Climate-related Financial Disclosures (TCFD) framework and to start engaging with the ISSB standards,’ Ms Press added.

ASIC encourages companies, investors and other interested parties to review the additional materials disclosed by the ISSB and TCFD frameworks. ASIC will continue to closely review a selection of annual reports on a risk-based approach to ensure entities are correctly disclosing their material business risks as part of the directors’ report.

Background

ASIC’s Regulatory Guide 247 Effective disclosure in an operating and financial review provides guidance to directors of listed entities on providing useful and meaningful information to investors in an OFR. Where relevant, this should include a discussion of sustainability-related risks where those risks could affect the entity’s achievement of its financial performance or outcomes disclosed, taking into account the nature and business of the entity and its business strategy.

ASIC previously announced it would review disclosures in the financial reports and OFRs of listed entities (22-333MR).

ASIC also previously announced improved material business disclosures by listed entities, as a result of its ongoing financial reporting surveillance program (22-332MR, 23-018MR, 23-058MR).