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Australian finance sector sets up HLEG-inspired Sustainable Finance Initiative

High-level initiative does not have government backing

Australia’s financial sector has today launched its very own sustainable finance initiative, inspired by Europe’s High-Level Expert Group on Sustainable Finance (HLEG), as it prepares to navigate the country’s economy through a “critical decade”.

The Australian Sustainable Finance Initiative – which is also modelled on the UK’s Green Finance Taskforce – has unveiled the members of its 18-strong steering committee.

It includes leaders and senior executives from major banks, superannuation funds, insurance companies, financial bodies, civil society and academia, and will now work on developing a sustainable finance roadmap for Australia to help catalyse the transition to a more “resilient and sustainable economy”.

Among those named are: David Atkin, CEO of A$47bn (€29.7bn) superfund Cbus; Emma Herd, CEO of the Investor Group on Climate Change; Matthew McAdam, Director Asia Pacific at the Principles for Responsible Investment (PRI); and Phil Vernon, Managing Director of Australian Ethical Investment.

Also involved is John Hewson, the former politician and former chair of the Asset Owners Disclosure Project (AODP) in his capacity as chair of the Business Council for Sustainable Development Australia.

Eric Usher, Head of the UN Environment Program Finance Initiative (UNEP FI), is an observer.

Australian banks – heavily criticised in a recent Royal Commission report – feature in the list with representatives from Westpac, National Australia Bank (NAB), Commonwealth Bank of Australia and ANZ.

It follows a call for expressions of interest in late 2018.

The initiative, unlike its European counterparts, has no backing from government. Instead, the process has been overseen by NAB and Australian insurer IAG, with the Responsible Investment Association Australasia (RIAA) acting as secretariat.

RIAA’s CEO Simon O’Connor and IAG’s Group Executive Jacki Johnson will also act as Co-Chairs of the steering committee.

Separately, IAG said Johnson, Group Executive of People, Performance & Reputation, would retire in June after 18 years with the company.

The original HLEG led to the Technical Expert Group on Sustainable Finance amid a broad EU Action Plan on Sustainable Finance.RI spoke to O’Connor earlier in the year about the initiative, when he said it would aim to deliver its vision and recommendations in a white paper to the government over the next 12-18 months, adding that it would keep the government closely informed of its work throughout.

O’Connor also expressed his hope that by the time the committee makes its recommendations, there would be a new, more “receptive” government, following polls later this year.

One of the observers to the initiative is Geoff Summerhayes, Executive Board Member of the Australian Prudential Regulation Authority (APRA). Australia’s prudential regulator last week announced plans to ramp up its scrutiny of regulated entities on climate change.

The steering group’s roadmap will be delivered in 2020; it will focus on:

1. Mobilising capital to deliver on national and global sustainable development and climate goals;

2. Enhancing the sustainability, resilience and stability of the financial system by embedding sustainability, climate and human rights considerations into financial markets and products;

3. Ensuring better informed financial decision making by enhancing disclosures and transparency on environmental, social and governance risks and opportunities; and

4. Delivering a financial system that meets community expectations around sustainability.

Neighbouring New Zealand is also working on an similar initiative, under the Ministry of the Environment; details are expected shortly.

“Issues such as climate change and human rights have become material to business and the financial services community”, said O’Connor.

“The financial services sector is both exposed to those risks, as well as having an essential role in funding and underwriting a future Australia, providing the capital necessary to deliver on sustainable development and climate-related commitments. Through a greater alignment between the financial services sector and these sustainability goals, the sector can both deliver for Australians while building a better, more stable and sustainable financial system”.

See here for RI’s country profile on Australia.