Australian finance sector names expert group to work on ‘science-based’ taxonomy

The Australian Sustainable Finance Initiative also announces search for consultants to assist taxonomy efforts, as investor groups welcome new Aussie prime minister's climate shift.

The Australian Sustainable Finance Initiative (ASFI), the financial sector-led sustainability body, has today announced a 44-strong expert group to provide technical input into the development of its “green” taxonomy.

Alongside the new technical advisory group, the ASFI has announced a project steering committee, described as an “executive level group of key financial market stakeholders, government and regulators who will provide strategic direction and oversight of the ASFI Taxonomy project”.

The development of an “industry-led” Australian Sustainable Finance Taxonomy was announced as priority for 2022 by the ASFI earlier this year, and the body put out a call for members of its new technical advisory group in March.

Included across the two newly created bodies are representatives from big Aussie banks, investors, insurers, regulators, data providers, consultants, academics and non-profits (see below for more details on members).

The ASFI stated today that “international credibility” will require its taxonomy to be “science-based” and added that it “will build on work underway in other jurisdictions to ensure international interoperability, while ensuring the taxonomy is fit for purpose in an Australian context”.

ASFI head Kristy Graham said: “Credible taxonomies help to make it easier to identify opportunities, create sustainable assets and activities, and guide capital to support the achievement of Australia’s climate and environmental objectives.”

Earlier this month, reports emerged that the UK would follow other jurisdictions, such as the EU, by controversially including gas in its “green” taxonomy.

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

Unlike most national sustainable finance bodies, ASFI and its 2020 roadmap were established without input from the Australian government.

Involvement at the federal level could be about to substantially ramp up, however, given that the country’s new prime minister Anthony Albanese has signalled a huge shift in climate policy. The Labor Party leader, who clinched victory in a general election over the weekend, has pledged to make Australia a renewable energy powerhouse.

Rebecca Mikula-Wright, CEO of the Investor Group on Climate Change, described the election result as a “climate reset for Australia”.

“Investors are now keen to work with the government to help progress policies that provide stability and send strong signals supporting climate-aligned investments across sectors,” she said.

Responding to the election result, the head of the Responsible Investment Association Australasia (RIAA), Simon O’Connor, said the non-profit looked “forward to seeing strengthened climate change commitments, greater support for investment in green energy, along with greater action to value and protect natural capital”. The RIAA was key in the creation of the ASFI.

In March, the ASFI stated that the government was already showing more interest in its work and revealed that a new advisory committee would include representatives from the Australian Prudential Regulation Authority, Australian Securities and Investments Commission and the Reserve Bank of Australia, as well as the government of New South Wales.

The new technical advisory group announced today will also include the Council of Financial Regulators, the co-ordinating body for Australia’s main financial regulatory agencies, as an observer.

ASFI’s Graham stressed in an email that, while there is a lot of attention on Albanese’s new government, “an Australian taxonomy is a critical part of the sustainable finance architecture to deliver on climate commitments”.

Along with naming the technical working group and steering committee, the ASFI put out a request for proposals from consultants “with the appropriate skills knowledge, expertise and leadership credentials” to support the first phase of the taxonomy project.

The initial phase of the taxonomy work will involve analysing taxonomies being established elsewhere, setting out guiding principles for an Australian one and making recommendations on the most appropriate framework for Australia.

The deadline for proposals is 14 June.

Technical Advisory Group members

Among the members of the technical working group is Emma Herd, former CEO of the Investor Group on Climate Change and now a partner at consulting firm EY.

Representing asset owners is Claire Heeps, senior responsible investment adviser at super-fund HESTA. Her former colleague Daniela Jaramillo, now director of sustainable investing at Fidelity International, is also involved.

The group also includes representatives of influential non-profits, including the UN-supported Principles for Responsible Investment, RIAA, Climate Bonds Initiative, and the Australian Council of Superannuation Investors, which represents 36 super-funds in the country.

Other notable names include Susheela Peres da Costa, the former head of advisory at Aussie ESG research provider Regnan. Peres da Costa is currently chair of the RIAA and board member of US-based non-profit The Shareholder Commons.

Academic Carol Adams is also named as member of the technical advisory group. Adams is an advocate of a “double materiality” approach to corporate reporting that looks at how business activities impact the environment and society, as well as how corporate bottom lines could be affected by sustainability issues.

Project steering committee

Members of ASFI’s steering committee include super-funds HESTA and Cbus; banking groups National Australia Bank and Commonwealth Bank of Australia, insurer IAG and Australia’s government-owned green bank, the Clean Energy Finance Corporation