Investors, insurers and banks call for ‘Australasian HLEG’

Member bodies say Australia and New Zealand need sustainable finance roadmaps similar to Europe’s

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Leading associations from the banking, insurance and investment sectors – representing over A$10trn (€6.39trn) in assets – have called upon Australia and New Zealand to keep pace with Europe and develop their own sustainable finance roadmaps, akin to the European Commission’s recent Action Plan.
In a statement on the issue, signatories – including the Principles for Responsible Investment (PRI), Australia’s Investor Group on Climate Change and Responsible Investment Association Australasia (RIAA) – have pledged to leverage their influence to “convene leading banking, insurance and investment initiatives and key stakeholders, such as government, regulators, consumers and civil society, to start a process to develop Sustainable Finance Roadmaps for Australia and New Zealand”.
They argue that the establishment of such sustainable finance programmes is becoming “the norm internationally”, and cite a number of initiatives around the world, including the UK Government-backed Green Finance Taskforce, which issued recommendations to Government in March on how it could scale up climate finance and innovation the country. 
The statement follows a conference in Sydney last month hosted by the United Nations Environment Programme Finance Initiative (UNEP FI).
Such roadmaps “provide pathways and policy signals and set frameworks to enable the finance sector to contribute more systematically to the transition to a more resilient and sustainable economy, consistent with global goals”, according to the statement.
Staying in Australia, climate conscious investors representing more than A$2trn (€1.28trn) are also urging the Australian Government to address “outstanding flaws” in the design of its proposed National Energy Guarantee, ahead of a meeting to decide its fate. 
The investors are demanding that the proposed strategy “must set out credible emission reduction targets” that align with Australia’s commitments under the Paris Agreement, or run the risk of “policy paralysis”.
They argue that, as it stands, the Government’s energy transition strategy does not support a viable emission reduction plan and supports “almost no new investment after the end of the Renewable Energy Target in 2020”.
“It is in no one’s interest to see the National Energy Guarantee fail. We are close to establishing a policy mechanism that has the potential to address the energy trilemma with broad political support” said Emma Herd, CEO of the Investor Group on Climate Change (IGCC), the group leading the campaign.
“But the design of the Guarantee and the emissions reduction it delivers have to add up to a credible trajectory towards meeting the goals of the Paris Agreement, or we risk losing another decade to policy paralysis and the increasing costs of climate change”.The call comes ahead of the meeting of the Council of Australian Governments (COAG) Energy Council tomorrow (10 August).
Australia has also unveiled its first ever stewardship code, being one of the last major economies to do so.
The Financial Services Council (FSC), Australia’s investment industry body, launched its Internal Governance and Asset Stewardship Standard on the 17 July, following the end of a transition period that started at the beginning of the year. 
The new “comply or explain” code, which is mandatory for all the FSC’s 100+ members, aims to “encourage higher standards of internal governance and stewardship practices” in the country.
Expressing her “pride” over the code, Sally Loane FSC’s head, said: “Stewardship is about building and growing sustainable businesses to produce long-term benefits for all stakeholders, and in the process contributing to the community and economy as a whole”. 
In May, the Australian Council of Superannuation Investors (ACSI) launched its stewardship code for asset owners, looking at voting, corporate engagement, monitoring asset managers and “financial system advocacy”. 
Signatories must commit to publishing a Stewardship Statement, which describes, on a ‘comply or explain’ basis, how it applies relevant principles.
Australia joins the likes of the US, Japan, Hong Kong, the Netherlands, Switzerland, South Korea, Malaysia, and Brazil, which all introduced such codes following the first even stewardship code, launched by the UK in 2010.  
The FSC oversees an industry responsible for investing more than A$2.7trn on behalf of 13m Australians.
Finally, RIAA, the region’s responsible investment industry body, whose 220 members manage more than A$9trn in assets, has released its annual Australian Responsible Investment Benchmark Report. 
The 2018 iteration of the report claims that over half (55%) of professionally-managed assets in Australia are now invested as responsible investments – up to A$866bn from A$622bn in 2016. They attribute the up-swell to the growing use of ESG in conventional funds.
Simon O’Connor, CEO of RIAA, said: “We are now at a stage whereby issues such as climate change, human rights, corporate culture, diversity and a whole range of other important sustainability issues are right at the forefront of consideration by Australia’s finance community”.