Australia’s sustainable finance roadmap aims to mobilize private capital for net zero


The Australian government has outlined a key update to its sustainable finance structure with the release of its latest Sustainable Finance Roadmap.

According to ESG Today, this plan targets the core development of the country’s financial sectors to boost the mobilization of private capital necessary for achieving a net zero economy. The Roadmap, which builds on previous sustainable finance initiatives, focuses on mandatory climate-related reporting, establishing a sustainable finance taxonomy, and introducing a labeling system for sustainable investments.

Central to the strategy is the institution of mandatory disclosure requirements for climate-related financial risks and opportunities. New draft legislation introduced earlier this year mandates that large and medium-sized enterprises report on climate-related risks and potential opportunities, as well as greenhouse gas emissions throughout their value chains. The Australian Accounting Standards Board (AASB) is set to finalize its climate reporting standards by August 2024, while the Australian Auditing and Assurance Board (AUASB) is expected to complete assurance standards for these disclosures later in the year.

Moreover, the Treasury plans to implement a Sustainable Finance Taxonomy by the end of 2024, curated by the Australian Sustainable Finance Institute (ASFI). This taxonomy will provide essential criteria for evaluating how well economic activities align with climate and other sustainability goals, initially covering sectors pivotal to climate change mitigation.

The Roadmap also proposes the creation of labels for sustainable investment products, a move designed to guide investors on the sustainability considerations integrated into investment strategies. This initiative is set to help mitigate the rising concern over greenwashing in the financial sector. Legislative actions to establish this labeling regime are planned for 2026, with its implementation expected the following year.

Furthermore, the government intends to bolster regulatory capabilities to address systemic climate-related financial risks impacting banks, insurers, and superannuation funds, and to tackle key sustainability data challenges. In line with these strategies, the government celebrated its first issuance of green bonds earlier this month, successfully raising $7bn.

Australian Treasurer Jim Chalmers highlighted the Roadmap’s objectives, stating: “This Roadmap will help mobilise the significant private capital required for Australia to become a renewable energy superpower, modernise our financial markets and maximise the economic opportunities associated with net zero and our sustainability goals. This is about creating well‑designed and well‑informed financial markets to help companies and investors make investments with confidence, better manage climate and sustainability risks, and help finance the transition to net zero.”

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