Investment sector lagging in climate reporting requirements

6 August 2025

| By Adrian Suljanovic |

Australia’s investment sector has averaged just 31 per cent alignment with mandatory climate reporting rules, new research has shown.

Australia’s investment management industry has shown unpreparedness for upcoming climate reporting requirements, achieving just 31 per cent average alignment with the Australian Sustainability Reporting Standards (ASRS), according to new research from sustainability consultancy Canbury.

The analysis, titled Meaningful climate reporting in Australia, has assessed the climate disclosures of 39 major financial institutions representing 70 per cent of the country’s professionally managed assets.

It has delivered the first industry-wide benchmark, as the sector transitions from voluntary to mandatory reporting.

The research has uncovered significant preparation gaps, particularly in quantitative disclosures. Institutions have averaged only 23 per cent alignment on metrics and targets – the data investors are increasingly demanding.

However, strong governance foundations have been identified, with 59 per cent alignment on climate governance structures, suggesting clear pathways for strategic improvement.

Mid-sized institutions managing between $10 and $50 billion have emerged as the most prepared, averaging 36 per cent alignment.

These groups have outperformed both smaller (18 per cent) and larger (33 per cent) institutions, suggesting an agility advantage in adapting to regulation.

Executive director at Canbury, Florence Van Dyke, stated that we’re witnessing “an industry in transition”.

"While the 31 per cent readiness rate might seem concerning, it actually reflects strong foundational work being done across the sector,” Van Dyke said. “The institutions that approach ASRS strategically – rather than as a compliance exercise – will create lasting competitive advantages.”

Asset owners, such as superannuation funds, have tended to lead in forward-looking disclosures and scenario analysis, likely due to longer investment horizons and stakeholder expectations, the research found.

Asset managers, despite sometimes demonstrating strong governance frameworks, have generally lagged on strategic climate disclosures.

Overall, the analysis has identified critical industry-wide gaps in climate disclosure.

Only 26 per cent of institutions have disclosed comprehensive greenhouse gas emissions across all scopes, while just 10 per cent have reported absolute gross financed emissions data. No institution has fully quantified the financial impact of climate-related risks or opportunities.

Additionally, only 19 per cent have disclosed any link between executive remuneration and climate outcomes.

“The data shows this isn’t about a few institutions falling behind – it’s a sector-wide challenge that requires systematic preparation across governance, strategy, risk management and metrics,” Van Dyke said. “But we also found excellent examples of preparation that other institutions can learn from.”

Mandatory ASRS reporting will begin with Group 1 entities for financial years commencing 1 January 2025, followed by Group 2 and 3 entities in later years. The standards require detailed disclosure across four key pillars: governance, strategy, risk management, and metrics and targets.

Canbury has noted that institutions willing to invest in thorough preparation stand to benefit competitively.

Opportunities for differentiation include building quantitative analysis capabilities, measuring emissions comprehensively, creating credible transition plans, and embedding climate considerations into core financial reporting.

Drawing on international experience from markets such as the UK, Europe, and New Zealand, Canbury has positioned ASRS as more than a compliance framework.

It has described it as a platform for aligning Australian institutions with global best practice, while enabling leadership in sustainable finance.

“Our international experience shows that early movers don’t just meet compliance requirements – they build stronger stakeholder relationships and attract ESG-conscious capital,” said Will Martindale, Canbury co-founder.

“The Australian market has a real opportunity to lead in sustainable finance.”