Australia Gets New 10-Year Roadmap on Sustainable Finance

The roadmap makes 37 recommendations, including a 2023 deadline for financial institutions and major listed companies to report according to the TCFD framework.

The Australian Sustainable Finance Initiative (ASFI) launched a roadmap last week that calls for financial institutions to embed sustainability in their core purpose, strategy and leadership.

The body comprises 80 organisations including banks, insurers, super funds, civil society, academia, regulators and government. APRA (Australian Prudential Regulation Authority) and ASIC (Australian Securities and Investments Commission) have supported the initiative as observers.

The roadmap makes 37 recommendations that will enable the financial services sector, together with regulators and governments, to strengthen Australia’s financial system with the aim of recovering from the impacts of Covid-19 and delivering a transition to a net zero, resource-efficient and inclusive economy.

The recommendations are categorised into four key themes: (1) Embedding sustainability into leadership; (2) Integrating sustainability into practice; (3) Enabling resilience for all Australians; and (4) Building sustainable finance markets.

Among the recommendations are near term objectives to develop TCFD reporting guidance, and a 2023 deadline for financial institutions and ASX 300 companies to report according to the TCFD framework on an ‘if not, why not’ basis.

The report also suggests that climate change financial risk vulnerability assessments being undertaken by APRA should be expanded to include small and medium financial institutions as well as the superannuation and insurance sectors.

Other recommendations include establishing a taxonomy project, creating a stress-testing framework and related guidance, embedding sustainability into regulatory guidance and standards, and embedding sustainability into outsourcing and procurement.

“The Roadmap signifies a step change in how the finance sector does business,” said Jacki Johnson, ASFI Co-chair. “It provides a path towards a financial system that is better prepared to face future risks and shocks, such as a changing climate; to meet the current needs of Australians while delivering on long-term needs for a sustainable future; to enhance financial inclusion and well-being of all Australians, including our most vulnerable; and to direct capital to where it is most needed.”

“We are seeking to re-orient capital – where capital is lent, what it insures and where it is invested – to supporting and building value today while strengthening the economic, natural and social assets that underpin our long term prosperity.”

The roadmap is available here.

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