The second Progress Tracker report on the Australian Sustainable Finance Roadmap has just been released, showing momentum towards a more sustainable finance sector – however, more needs to be done to create a sustainable, resilient and inclusive Australia.

Across the world, there is a marked shift across the finance landscape as the concept of ‘sustainable finance’ is moving into the spotlight of global attention. The Australian Sustainable Finance Roadmap, first published in 2020, speaks to this new movement.

The aim of the Roadmap is to realign the finance sector to support greater social, environmental and economic outcomes for the country. It was created by the Australian Sustainable Finance Initiative (ASFI), comprising 140 representatives from finance sector organisations, civil society, academia, government and regulators.

The Roadmap includes 37 recommendations, which set out a plan to realign the Australian financial system to support human well-being, social equity and the environment.

 

 

The Progress Tracker

This is the second Progress Tracker on implementation of the Roadmap. So far, it shows that some progress has been made against a broad range of recommendations, as well as some standout achievements.

Executive Officer Kristy Graham says, “Among Australian financial institutions we have seen a raft of net zero commitments and transition planning, an increase in climate-related reporting aligned with international standards, and much greater integration of climate into boardrooms, the C-Suite and risk management teams. This shift is being supported by government policy including the legislating of Australia’s emissions targets, and an increased focus by financial regulators on climate risk and opportunities.”

However, despite these successes, the overall score is a modest 2 out of 5.

 

 

Gaps and opportunities

Australia currently lags behind jurisdictions like the UK, EU and Singapore on sustainable finance policy and regulation. To address this, the Progress Tracker highlighted some important gaps and opportunities to focus on in 2023 and beyond.

It calls for some ‘quick wins’ by government to support Roadmap implementation including joining the International Platform on Sustainable Finance and developing a Sustainable Finance Strategy. This would signal Australia’s commitment to managing climate and sustainability-related risks in the financial system and help guarantee cost-effective capital to fund transition activities.

Other recommendations include developing “transition pathways” to decarbonise specific sectors of the economy, more support for early-stage climate innovation, and the establishment of a social impact fund modelled on the UK’s Big Society Capital.

 

 

What’s next for sustainable finance?

Report research leaders KPMG Partner Climate Change & Sustainability Partner Mark Spicer said, “There are elements of significant progress against the Roadmap, however there still is a lot of work to be done to catch up with other leading economies. We want to ensure that the Australian financial system is aligned to a climate transition and has a strong focus on restoring Australia’s natural ecosystems and building a more inclusive economy.”

As such, there is still substantial effort required to translate this recent momentum into real world impacts to create a safe climate, restore Australia’s natural capital, and support a thriving society – all of which are consistent with a well-performing financial system.

“We need to accelerate progress to match the urgency of the challenges before us. This will require an unprecedented level of action and collaboration across the entire financial system,” Executive Officer Kristy Graham said at the ASFI Summit.

 

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