Industry groups including the Responsible Investment Association Australasia (RIAA) and Financial Services Council (FSC) have welcomed the Government’s commitment to a Sustainable Finance Agenda and a consultation on a mandatory climate-related financial disclosure.
Announced by Treasurer Jim Chalmers, the revised framework would require more information and greater transparency by large financial institutions and businesses on their transition to net zero and their response to climate change.
Simon O’Connor, chief executive of RIAA, said the move towards building a sustainable finance taxonomy was “an important signal and a critical underlying piece.”
“By reaffirming its commitment to mandatory corporate climate risk reporting, the Government is supporting investors to make better decisions, to be able to compare apples with apples. These climate disclosure standards must be clear and robust, to ensure investors can distinguish corporates with real commitment and outcomes from the illusion of tangible change,” O’ Connor stated.
“There should be scope to grow this reporting regime to broader sustainability performance – important areas such as upholding First Nations Peoples’ rights and protecting and restoring biodiversity. These matters are also front of mind for investors and are also shaping decisions on where they deploy their capital.”
Centre for Policy Development Sustainable Economy program director, Toby Phillips, believed such regulation would bring Australia into line with major global economies and be one step closer to an orderly climate transition.
“The Government’s decision to move Australian markets into line with this global practice will deliver greater comparability, certainty and clarity both within Australia and abroad, and will empower regulators, businesses and investors to participate in sustainable finance with confidence,” he said.
“The indication that public authorities will be included in this taxonomy is important as they are some of the most significant participants in the Australian economy, and yet they are insulated from the pressures that have led to climate risk disclosure across private markets. Nevertheless their inclusion is necessary for a complete and shared picture of climate risk and opportunity for investors, business leaders and policymakers.”
According to Spiro Premetis, acting CEO of the FSC, reaching a data-driven consensus on what constituted sustainable investment would lead to more efficient capital flows.
“Having consistent and globally interoperable reporting of climate risk across Australian companies is vital in ensuring that investment decisions can be made in the best long term financial interest of Australians,” he stated.
“The investment community sees climate change as a financial risk to their investment portfolios, and a risk to the savings of millions of Australians. A mandatory climate risk reporting regime is needed if Australia is to meet its national emissions reduction targets. It will lead to better quality and more consistent disclosures across the economy and a more efficient allocation of capital toward sustainable investments.”
Financial institutions and superannuation funds such as NAB, ANZ, Aware Super, HESTA and Allianz also welcomed the development of a “a sustainable finance system that benefits all Australians” through a Joint Statement on Accelerating Sustainable Finance.
This development is sure to generate heat in the blood vessels of a few of the regulars here and to make it harder for Australia to reach its 43%.
Move all industry to China and India – CO2 problem solved for Australia mate?