The development of an Australian sustainable finance taxonomy project was a joint industry-government initiative led by ASFI.
ASFI delivered the Australian taxonomy for climate change mitigation to Government on 14 February 2025. We are working with Government on a joint release by mid-2025, as outlined in the Government's Sustainable Finance Roadmap.
Australian Sustainable Finance Taxonomy
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About the Australian Taxonomy
A sustainable finance taxonomy is a framework to classify economic activities that positively contribute to key environmental sustainability objectives.
The Australian sustainable finance taxonomy provides a common standard for green and transition finance in Australia, helping to accelerate the allocation of capital towards activities that enable Australia’s net zero ambitions.
The Australian taxonomy will:
make it easier for financial institutions to identify investment and lending opportunities;
provide financial and non-financial corporate entities with greater confidence in and assurance over sustainability claims;
support the provision of consistent and comparable information to users;
enable comparability between investment products and portfolios; and
reduce transaction costs associated with due diligence by providing market clarity on whether a transaction is contributing to Australia’s climate change mitigation goals, thereby increasing the attractiveness of transactions for sustainable activities.
Taxonomy Project Governance
The Australian Council of Financial Regulators’ Climate Working Group (CWG) oversaw the development of the Australian taxonomy, as part of its role in supporting the development and implementation of the Australian Government’s Sustainable Finance Strategy.
A Taxonomy Technical Expert Group (TTEG) was appointed by the CWG as the decision-making body for the Australian taxonomy’s development. The TTEG comprised 25 experts who provided strategic direction over, input into and endorsement of the Australian taxonomy. The TTEG has delivered on its mandate and was dissolved in February 2025.
ASFI also undertook comprehensive stakeholder engagement as part of this work, including through the establishment of sector-specific advisory groups and a formal public consultation process.
Taxonomy Development Phase
The Australian sustainable finance taxonomy’s initial development phase ran from July 2023 to February 2025. It was a joint industry-government initiative, led by ASFI in partnership with the Australian Treasury, to develop a sustainable finance taxonomy for climate change mitigation that is usable; credible; interoperable; and focuses on priority areas for impact in Australia.
The initial Australian taxonomy comprises climate change mitigation criteria for six economic sectors, a Do No Significant Harm framework, and Minimum Social Safeguards.
The six sectors covered by the initial Australian taxonomy are:
electricity generation and supply;
minerals, mining and metals;
buildings and construction;
manufacturing and industry;
transport; and
agriculture and land use.
Sector coverage aligns with the six sector decarbonisation plans that the Australian Government is developing for the Australian economy to mobilise private sector investment to support the transition to net zero, invest in Australia’s ability to become a renewable energy superpower and achieve our other sustainability goals.
The Australian taxonomy’s initial development phase provided a strong foundation for an enduring taxonomy framework, which may include permanent institutional arrangements for taxonomy development and maintenance, and the incorporation of finalised taxonomy criteria into regulatory architecture to support sustainable finance.
Further Reading
Frequently Asked Questions
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A sustainable finance taxonomy is a set of definitions of economic activities and assets that contribute to key sustainability objectives.
A sustainable finance taxonomy makes it easier to identify investment opportunities, create sustainable assets and activities, and helps guide capital to support the achievement of Australia’s climate, environmental and social objectives.
It also provides the finance sector with greater confidence in and assurance over sustainability claims, enables comparability between investment products and portfolios, and reduces transaction costs.
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Transition finance aims to mobilise capital toward initiatives that facilitate the decarbonisation of hard-to-abate sectors. Decarbonising these sectors will play a crucial role in reducing Australia’s national emissions, greening financial portfolios, and reducing systemic risk exposure across the economy.
It is imperative that financial institutions have access to credible and consistent transition criteria that progressively steer economic activities toward taxonomy alignment and assist in mitigating the risk of greenwashing.
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ASFI is committed to realigning the finance sector to create a sustainable and resilient financial system by directing capital to support greater social, environmental and economic outcomes. We do this by coordinating, facilitating and driving implementation of ASFI’s Australian Sustainable Finance Roadmap (2020). The development of a sustainable finance taxonomy is a key recommendation (Rec. 9) under the Roadmap.
ASFI’s membership spans the full breadth of the finance sector, including banking, investment, insurance, assurance and other intermediaries, such as data and ESG information. This means we are well placed to work at a system level to address systemic challenges across climate, environment and social aspects of the sustainable finance agenda.
ASFI is not a peak body representing particular industry interests, rather it is an institute backed by representatives across the finance sector to drive implementation of the roadmap recommendations.
As secretariat of the taxonomy’s development, ASFI worked with an international consortium of taxonomy and sustainability specialists led by global standard setter, the Climate Bonds Initiative, to prepare the technical products for the TTEG’s consideration, input and endorsement.
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The ASFI Board did not have decision-making powers in respect of the Australian taxonomy’s development. Decision-making powers were vested in the TTEG, with oversight from the Council of Financial Regulators’ Climate Working Group.
As a governance board, the ASFI Board has responsibility for strategy, budgets, organisational level risk and oversight of ASFI and is not involved in management decisions, such as the selection of the TTEG or the work that was undertaken on the Australian taxonomy’s development.
More information on ASFI’s governance arrangements is set out in our Constitution, Board Charter and Code of Conduct, mission, vision and values and strategy and business plan.
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The Council of Financial Regulators’ Climate Working Group decision minute on the constitution of the TTEG sets out the basis on which TTEG members were selected.
The TTEG comprised a balanced cross-section of experts, including in sustainable finance; climate and environmental science and policy; circular economy; human rights; and Indigenous perspectives.
