Unlocking budget for a super fund to uplift its climate disclosure capabilities

If you had to disclose next month, where would the gaps be, and what would it take to close them?

The Head of Sustainability for a leading retail superannuation fund needed to understand how to prepare their organisation to respond to the new Australian Accounting Standards Board (AASB) climate-related disclosure requirements. Our client knew that credible compliance required an uplift in climate-related capabilities across the. But there was no guidance or industry benchmark to help scope and cost what needed to change.

Mindful that Baringa had assisted in writing climate disclosure regulatory standards and designing scenario models in the UK (which is leading in this space), the client asked our team to help scope the business case. The goal was to not just to unlock budget to prepare for the current disclosure requirements, but to position the fund to keep up with evolving standards. The team didn’t want to have to rebuild every time regulation evolved.

Taking a capability view

Meeting the AASB requirements is not a check box exercise. Institutions need to integrate climate considerations across risk, strategy and governance. Rather than starting with the list of what needed to be disclosed and trying to figure out how the organisation might report against each metric, we took a capability view. 19 capabilities were required to credibly disclose against all the standards. Interviewing and educating key stakeholders across the business highlighted which capabilities were missing, foundational or established. 

Sequencing the capability uplift was complex as the organisation’s group holding structure contains dozens of separate legal entities – many captured under different disclosure timelines with different Boards. The Group had the most pressing timeline, so that was the priority. We set up the future resourcing plan with the aim of supporting subsidiaries to leverage group-level capabilities when they disclose, as much as legal separation allows.

Building the business case for climate compliance and sustainability uplift

Our client was now able to provide the business case on a future state for the fund’s climate risk management, a two-year capability uplift plan and a cost for the quarterly resource requirements. The business case clearly set out a pathway to compliance. It included internal frameworks to embed climate considerations across business functions and a roadmap to integrate climate risks and opportunities into long-term planning.

The business case resulted in additional resourcing and a data and systems uplift. New hires have been brought on, resources from other teams ring-fenced and implementation begun.

Leadership is confident that they will be well-positioned to meet the evolving regulatory landscape and proactively integrate climate risk considerations into its business strategy.

Find out how we help our clients in Climate Change and Sustainability