Aussie government ‘more open to using policy and regulatory levers’ on climate

Kristy Graham, executive director of Australia’s industry-led sustainable finance body, speaks about closer links with government and taxonomy efforts.

Policymakers in Australia are more open to engagement with the country’s sustainable finance body than under the previous administration, the head of the industry-led group has told Responsible Investor.

The absence of government involvement in Australian Sustainable Finance Initiative (ASFI) had previously set it apart from initiatives in many other jurisdictions.

Following the election of prime minster Anthony Albanese in May, however, the Treasury has “definitely been able to be more proactive and active in the work around the taxonomy, as well as being engaged in ASFI’s work more broadly”, said Kristy Graham, executive director of the initiative.  

In August, Albanese’s Labor government enshrined into law a climate bill that included a target to reduce greenhouse gas emissions by 43 percent by 2030, in addition to a 2050 net-zero goal.  

“Given the positive developments on the policy front and the government’s ambition, there’s a lot more appetite to be thinking about things like taxonomy and more openness to using a range of different policy and regulatory tools to achieve climate ambitions,” said Graham.     

The “political level leadership” now being seen has given a “huge boost” to the work of ASFI, she added. At the same time, she noted, it’s “off the back of a lot of quiet kind of collaborative growth that we’ve been doing with bureaucracy since we were established”.

Graham was named ASFI’s inaugural executive director in October. Prior to taking up the post, she spent more than seven years at the Australian Department for Foreign Affairs and Trade.  

Links to the government have also been strengthened through key hires such as Nicole Yazbek-Martin, who was appointed in July to oversee ASFI’s taxonomy efforts, joining from the Australia’s Department of Climate Change, Energy, the Environment and Water. 

ASFI was created in 2019 by the Australian finance sector. Work on a sustainable finance taxonomy was chief among the initiative’s priorities for 2022.  

In July, EY won a tender to help the body with the taxonomy and collaborate with the 44-strong technical expert group and project steering committee unveiled in May. An official from the Department of Treasury was named as an observer to the work of the expert group, as were representatives of financial regulators ASIC and APRA and the Reserve Bank of Australia.  

Graham told RI that ASFI is also working “really closely” with taxonomy efforts in other regions, such as Canada, Singapore, the EU and UK.  

She pointed to a late-mover advantage to its work. “We are in the privileged position of being able to tap into lessons learned, not just in terms of the objectives they’ve sought to achieve or the purpose of their taxonomies, but also the processes that they’ve used.”   

International credibility and interoperability have been cited by the ASFI as important considerations for its taxonomy along with ensuring that it is “fit for purpose in an Australian context”. 

As with Canada, Graham highlighted that Australia’s economy is resource-based, meaning that a focus on transitional activities is key.  

Clarity around such activities is “not something that the EU taxonomy did particularly well first time around”, she said. This issue was also recently raised by Patricia Plas, group director of public affairs at French insurance giant Axa.   

“There’s a big transition challenge and so to be fit for purpose in the Australian context we will need to have more clarity around what classifies as a transition activity,” said Graham. She added that ASFI is working with the Canadians and Singaporeans to get “more clarity and rigor structure” on the topic. 

In April, RI reported that work on Canada’s overdue “transition taxonomy” had been paused following “fundamental differences of opinion” between committee members working on the framework. 

A spokesperson for CSA Group, the Canadian standard setting body overseeing the country’s taxonomy, told RI that there was no update on the work. In July, the group did publish a report Global Financial Taxonomies – Considerations for the Canadian Context in collaboration with Climate Bonds Initiative.  

Later this month, ASFI will publish its own paper exploring how applicable other international taxonomies are for the Australian context.  

Then in December, the group is expected to publish another paper with recommendations on what Australia’s taxonomy should look like, including areas such as “the level of ambition, the purpose, the governance structure, criteria, process and timing”, said Graham. 

Next month, ASFI will host its first sustainable finance summit (28 October).