The government has announced it will be co-funding the initial development of an Australian Sustainable Finance Taxonomy to crack down on greenwashing.
In partnership with the Australian Sustainable Finance Institute (ASFI), it would help to attract more green investment to Australia by helping to target particular sustainability objectives and ensuring investments are delivering on their sustainability claims.
This included $4.3 million for the Australian Securities and Investments Commission (ASIC) to crack down on businesses making misleading claims about the sustainability or efficiency of their products.
The funding would help the corporate regulator expand its surveillance and enforcement functions, Treasury said.
“A strong and proactive regulatory approach will reduce the risk of greenwashing, supporting investor sentiment towards Australia as a destination for green capital.”
Reacting to the news, Estelle Parker, executive director at the Responsible Investment Association Australasia (RIAA), said: “RIAA welcomes the government’s — and regulators’ — focus on greenwashing, which is a real threat to the integrity of the responsible investment sector. Our regulators obviously need to be appropriately resourced to do this work.
“Further enforcement needs to go arm in arm with greater clarity for the sector, which is why we’re keen to see a financial product labelling scheme introduced in this country. Financial product labelling schemes have been introduced in the EU, and the UK and US are already heading in the same direction.”
ASIC had already commenced civil penalty proceedings against Mercer Super for alleged greenwashing and issued infringement notices to Vanguard. It was also understood to have several super funds on its radar for future investigations.
Action against greenwashing was one of ASIC’s 2023 Enforcement Priorities. To date, it has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which included Vanguard Investments Australia and Diversa Trustees Limited.
A second part of the taxonomy included a sovereign green bonds program which would enable investors to back public projects driving Australia’s net zero transformation and boosting the scale and credibility of Australia’s green finance market.
Mark Whelan, group executive of institutional at ANZ, said: “We welcome these announcements, particularly around plans for sovereign green bond issuance, which will help drive further development of green, social and sustainable lending and bond markets in Australia.
“This will also better align us with overseas markets, giving certainty to onshore and offshore borrowers and investors while unlocking much-needed capital for green and social initiatives.”
