Elena Philipova

Refinitiv has released the findings of Financing a Sustainable Future in Australia, a new report which looks at the environmental performance of Australian companies compared to global peers.

The report finds that Australia’s largest companies are well below their global peers in reporting on environmental sustainability. Australia’s average environmental pillar score is 45.36, well below the global average of 59.6 and behind regional peers, such as Hong Kong (70.06), South Korea (64.57) and India (63.12). These environmental scores are based on performance across three themes: emissions, resource use and innovation.

With a breakdown of the average environmental pillar score for each Australian business sector the report reveals some areas of improvement. The top three sectors are banking and investment services with 59.04 (up from 50.13 in 2014), insurance 57.37 (up from 44.27 in 2014), and telecommunications 55.07 (up from 39.04 in 2014).

Intention – Action Gap

While almost two-thirds (63%) of global companies have a policy to reduce emissions, up from 56% five years earlier, the report reveals only one-third of companies (35%) have specific reduction targets around emissions, indicating companies are setting policies without back up intentions.

Elena Philipova, Refinitiv’s Global Director of ESG, says we are also seeing this same emissions intention gap in Australia. “The number of companies with emissions policies in Australia have jumped from just over a third (31%) in 2014 to almost half (46%) in 2018.  However, the number of companies with specific reduction target emissions has remained relatively stable with only a 7% increase (12% in 2014 to 19% in 2018).”

Waste not, want not

Waste and recycling activities are undertaken by almost 16% of companies in Australia, up slightly from 11% in 2014.  Real estate, banking and investment services, and chemical companies are the sectors most likely to undertake these activities.

There has been an increase in the number of companies with resource reduction policies: 65% of Australian companies have these initiatives in 2018, up from 55% in 2014. However, Australia lags global trends in resource reduction policy, with more than three-quarters (78%) of global companies implementing such policies.

Water efficiency

Globally water is acknowledged as the world’s most precious resource and in recognition of this, the report highlights that in the past five years there has been a 25% increase in global companies with water efficiency policies while 34% of companies are setting specific water efficiency targets.

After a protracted drought and a subsequent catastrophic bushfire season, Australians are aware of the importance of this resource, however the report found that slightly more than a third (36%) of companies have a water efficiency policy, with only 11% holding specific targets.

Philipova says that while the Refinitiv report highlights Australian companies have a long way to go in achieving better environmental performance metrics, future success will require a collaboration between the public and private sectors as well as mobilization of significant finances both in Australia and globally to succeed.

“The current COVID-19 pandemic has highlighted that ESG is not just a bull market phenomenon. We are now seeing that companies with better ESG risk profiles have outperformed the broad market since its February peak. Companies that focus on sustainability will be more resilient in downturns and better positioned to capture opportunities when economic activity resumes,” she says.

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Almost three-quarters of Asia Pacific organisations have been victims of financial crime over the past 12 months.

Refinitiv, one of the world’s largest providers of financial markets data and infrastructure, has published its second annual financial crime report yesterday. Innovation and the fight against financial crime: How data and technology can turn the tide, one of the most comprehensive surveys of international businesses, highlights that almost three-quarters (75%) of Asia Pacific organisations have been victims of financial crime over the past 12 months with a lax approach to due diligence checks when onboarding new customers, suppliers and partners cited as creating an environment in which criminal activity can thrive. This wake-up call has led to 60% of Asia Pacific companies adopting new technologies to combat financial crime.

In its 2018 report, Refinitiv outlined that $1.45 trillion of aggregate turnover is lost as a result of financial crime.^[1]This year’s report shows that the cost could indeed be much greater. Only 62% of the 3,000 compliance managers Refinitiv surveyed across 24 geographies globally claimed that financial crimes were reported internally, and just 60% said that they were reported to the relevant external organization.

Over the next year, companies in Asia Pacific intend to spend on average 47% more to mitigate the crisis, compared with 51% globally. The increased investment emphasizes the priority placed on fighting financial crime in 2019 and reflects the amount of pressure respondents are under to be more innovative to both reduce risk and costs.

According to the report, an overwhelming majority of respondents globally (97%) believe that technology can significantly help with financial crime prevention with cloud-based data and technology the top choice, followed by AI and Machine Learning tools. Nearly, three quarters (72%) across the Asia Pacific region are struggling to harness technological advancements, and marked differences across the region, with 52% in China and 84% in India expressing the same difficulty.

Alfred Lee, Managing Director, Asia Pacific at Refinitiv, said the report reveals an opportunity for companies in the region to invest more in innovation, technology and processes to fight financial crime.

“With three-quarters of companies across Asia Pacific affected by financial crime in the past year, more investment must be made in technology and processes. Advancements in AL, ML and cloud computing are increasing companies’ abilities to analyze data in real-time, streamline processes such as Know Your Customer (KYC) and to uncover previously undetectable activity.

“At the same time, with companies only conducting due diligence on around half of external partners and customers, despite them accounting for the majority of financial crime cases, this is enabling an environment for criminal activity to flourish.

“Increased collaboration between technology companies, governments and financial institutions is critical to address this issue.”

Below are the key findings for Asia Pacific

• 75% of large organizations in Asia Pacific have been victims of financial crime over the past 12 months, compared to 72% globally. This was highest in India at 89%.
• 44% of Asia Pacific companies have experienced cases of financial crime by their own employees.
• An average of 4% of global turnover is spent on customer and third-party due diligence checks, rising to 5% in Australia and India in Asia Pacific.
• 52%: the percentage of external relationships that did not have an initial formal due diligence check at the onboarding stage. This rises to 62% in Hong Kong.
• 72% across Asia Pacific are struggling to harness technological advancements, including 52% in China and 84% in India.
• Across Asia Pacific just over half (52%) of the data and legal documentation obtained to carry out due diligence is in a digitized format.
• 82% in China (highest across all countries), while only 54% in Australia are prioritizing automation and digitization for investment.
• 81% globally and 83% in Asia Pacific say data privacy regulations are restricting their ability to collaborate against financial crime.
• 88% in Asia Pacific consider that the benefits outweigh the risks when sharing information and collaborating against financial crime. This is highest in India at 95%.

While the report focuses on the many emerging technologies coming on stream in the fight against financial crime, it also urges organizations not to overlook another vital form of innovation – collaboration. Just over eight in 10 (81%) respondents said that there is some sort of existing partnership or taskforce in their country to combat financial crime, including 85% in Asia Pacific. 86% believe that the benefits of sharing information within such a partnership organization outweighs any possible risks – this was slightly higher in Asia Pacific at 88%.

In 2018, Refinitiv partnered with the World Economic Forum and Europol to form a global Coalition to Fight Financial Crime. The Coalition is working with law enforcement agencies, advocacy groups, and NGOs to address the societal costs and risks that financial crime poses to the integrity of the global financial system.

[1] Revealing the True Cost of Financial Crime Report, Refinitiv, 2018: https://www.refinitiv.com/content/dam/marketing/en_us/documents/reports/true-cost-of-financial-crime-global-focus.pdf

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