Sustainable Finance Roadmap to turbocharge investment

Investor groups welcome the Australian Government's plan to mobilise private capital to the net zero transition, modernise financial markets and maximise the economic opportunity of sustainability.

The Sustainable Finance Roadmap aims to supercharge the nation's aspiration of becoming a renewable energy powerhouse, Treasurer Jim Chalmers said.

Building on the corporate climate disclosure regime, the plan sets out what is needed to embed the mandatory reporting regime, complete Australia's Sustainable Finance Taxonomy, and develop best practice guidelines to advise businesses on net zero transition plans disclosure.

Importantly, it offers a plan for development of product labelling requirements for investments marketed as sustainable, so investors can better understand sustainable finance products.

Notably, it also aims to help tackle greenwashing and data accuracy and promote the integrity and growth of sustainable markets.

Kristy Graham, CEO of the Australian Sustainable Finance Institute (ASFI), said the roadmap "provides welcome clarity on the next steps in Australia's sustainable finance agenda".

"Progress over the past 12 months in introducing mandatory climate disclosures and developing an Australian taxonomy is helping to ensure Australia can properly manage climate risk and capitalise on the renewable energy superpower opportunity."

Graham said additional reform, including product labelling and corporate transition guidance, "will further Australia's ability to attract international capital for the transition".

Erwin Jackson, managing director, policy, at the Investor Group on Climate Change (IGCC) said the roadmap "provides a foundation for appropriate sustainability information to be reported across economy, which will help investors, regulators, and stakeholders form a comprehensive understanding of the economy's climate risks and opportunities, fuelling investment in clean industry.

Both Jackson and Graham commended the roadmap for including scope for financial frameworks to address nature, climate adaptation and resilience.

"Clear financial frameworks to support private sector investment in climate adaptation are crucial to limiting the costs of escalating disaster recovery," Jackson said, which "is already costing the economy billions of dollars a year."

A "fair, fast and well-planned transition" would protect Australian's retirements from climate risk, and maximise the economic opportunity of the transition.

The additional scope is important for managing broader sustainability-related risk, Graham said.

ASFI is working with government to lead initial development of the Australian sustainable finance taxonomy, currently open for consultation, and on international engagement with key partners including Indonesia.

"Recent progress in the Government's sustainable finance agenda means Australia is increasingly positioned to demonstrate global leadership and influence the development of regional and international sustainable finance standards, particularly in areas like transition finance," Graham said.

The government's Sustainable Finance Strategy received more than 120 submissions during the consultation process, held from November 2023 to December 2023.

The proposal received broad support from industry, but said more work must be done.

ASFI and the IGCC, alongside the Australian Council of Superannuation Investors (ACSI), Australian Institute of Company Directors (AICD), Association of Superannuation Funds of Australia (ASFA), Business Council for Sustainable Development Australia (BCSD Australia), and Responsible Investment Association of Australia (RIAA), signalled their support.

Superannuation firms and asset managers, including Adamantem Group, Ardea Investment Management, Aviva Investors, BNP Paribas, AustralianSuper, Aware Super, Future Group, HESTA, and UniSuper, also signalled broad support.