ASFI December Update: 2022 Year in Review

Written By Isobella Halcrow

To round out a year of achievement and progress for both ASFI and Australian sustainable finance more broadly, at an ASFI-hosted event the Australian Treasurer the Hon. Dr Jim Chalmers MP announced that the Australian Government will strengthen climate risk reporting and develop a sustainable finance strategy. These measures will support the growth and credibility of sustainable finance and investment, ensuring we act faster to meet our climate change commitments and develop a sustainable finance system that benefits all Australians.

Industry participants at the event issued a Joint Statement on Accelerating Sustainable Finance, which endorses the Treasurer’s announcements on sustainable finance and outlines the actions that the finance sector will continue to take to support better climate, environmental and social outcomes.

These announcements were followed by the release of ASFI's framing paper Designing Australia's Sustainable Finance Taxonomy, which provides guidance and options for the design of an Australian taxonomy, including proposed purpose and principles, objectives, sectoral coverage, eligibility and alignment, transition and governance. It also provides a proposed roadmap and timeline for the development of the taxonomy. This is an important step toward ensuring we guide capital to support the achievement of Australia’s climate, environmental and social objectives.

However, as demonstrated in our 2022 Australian Sustainable Finance Progress Tracker report findings, and in discussions at our inaugural Australian Sustainable Finance Summit, there is still much work to be done in the coming year and beyond to fulfil ASFI's vision of realigning the Australian financial services system so that more money flows to activities that will create a sustainable, resilient and inclusive Australia.

ASFI's 2022 Progress 

Taxonomy project:

  • In 2022, ASFI established both our Project Steering Committee (SteerCo), to provide strategic guidance for the Taxonomy project, and Technical Advisory Group (TAG), which provides technical advice on the development of a Taxonomy. The ASFI Taxonomy Project is an industry-led initiative, which has worked closely with government and regulators throughout 2022 to work towards the development of an Australian sustainable finance taxonomy.

  • ASFI and Climate KIC partnered with the support of the European Union to present the European Union-Australia Sustainable Finance Dialogue, a series of technical workshops for the Australian finance and regulatory community to share expertise and experiences on the development and implementation of sustainable finance policy, including the EU taxonomy. At the first webinar, held in November, the ASFI Taxonomy Technical Advisory Group (TAG) had the opportunity to hear from Nadia Humphries, who is the EU Platform for Sustainable Finance Data and Usability Sub-Group Co-Rapporteur, and Ali Erbilgiç, a Senior Policy Expert at the European Banking Authority. A summary of the webinar is available here. Further workshops in the series will be held in 2023.

  • We also held two public webinars showcasing international taxonomy development, with over 100 participants at each. At the first webinar, ‘Key insights into the ASEAN sustainable finance taxonomy’, participants had the opportunity to hear from Eugene Wong, Chief Executive Officer at Sustainable Finance Institute Asia Limited, which hosts the ASEAN Taxonomy Board. Eugene provided an overview of the ASEAN taxonomy process and deep dive into key elements of the taxonomy. The second webinar, ‘Key insights on the development of the UK Green Taxonomy’, allowed attendees to hear from the Green Finance Institute, which hosts the UK Green Technical Advisory Group (GTAG), who are advising the UK Treasury on the development of a UK Green Taxonomy. The GTAG have recently released their much anticipated advice to the UK Treasury on the design and implementation of a UK Taxonomy.

TNFD

  • This year, ASFI has worked with the Responsible Investment Association Australasia (RIAA) and the Australian Government Department of Climate Change, Energy, the Environment and Water (DCCEEW) to support and ensure a strong, well-coordinated Australian voice in the development of the work of the TNFD.

  • ASFI supported members via a number of workshops throughout the year to inform and educate those interested in trialling or engaging with the TNFD beta framework. The TNFD Workshop Series took the form of three deep-dive workshops focusing on definitions; the climate-nature risk nexus and alignment with the TCFD; and data and metrics.

  • In 2022, ASFI also became a member of the Taskforce on Nature-related Financial Disclosures Forum. The TNFD Forum is a global and multi-disciplinary consultative group of institutional supporters. As a member of the forum, we can offer our technical expertise and practical market experience to help the TNFD build and develop a risk management and disclosure framework.

Leadership Forum

  • ASFI's work on leadership aims to form a strong community of sustainable finance leaders from across the sector who can share experiences, build knowledge and collaborate to drive the change within their organisations and sphere of influence to deliver the Roadmap and transform the financial system.

  • We held more than 22 ASFI events during 2022 that brought together financial institutions, government, regulators, universities and NGOs to collaborate and connect on sustainable finance. A core component of this was the launch of ASFI's inaugural Australian Sustainable Finance Summit, which hosted leaders from across the public, private and not-for-profit sectors to discuss where sustainable finance markets, policy and regulation and best practice for financial institutions is heading.

  • This year, ASFI also established our leadership working group, which held its first meeting on Thursday 27th October, with 12 ASFI member organisations participating. We received strong feedback from participants on the value of the group and its first session. We look forward to holding further sessions in 2023 on capability, culture, and leading across the system.

Progress Tracker

  • One of the drivers for establishing ASFI as a permanent body was for an institution to own and report annually on the implementation of the Australian Sustainable Finance Roadmap (the Roadmap), providing an evidence base to inform what more is needed to support the growth and impact of the sustainable finance market in Australia. A progress tracker report was produced in mid-2021 that provided case study-based information on how different parts of the finance sector were using the Roadmap. In 2022, ASFI released our second Progress Tracker report on implementation of the Australian Sustainable Finance Roadmap.

  • The Progress Tracker report shows progress has been made against a broad range of Roadmap recommendations, but also highlights some important gaps and opportunities for focus in 2023 and beyond. The modest score across all recommendations of 2 out of 5 underscores the substantial effort required to translate recent momentum into real world impacts to create a safe climate, restore Australia’s natural capital, and support a thriving society. 

Government Engagement in 2022

  • In 2022, ASFI facilitated 15 member events with the Federal Government, regulators, think tanks and international and national pioneers in sustainable finance, and contributed to many more. This included a number of ASFI member roundtable discussions with Government ministers and senior officials from Treasury, PM&C, DFAT and DCCEEW, among others

  • Accelerating Sustainable Finance with the Australian Treasurer. The Hon. Jim Chalmers MP delivered an address on sustainable finance to CEOs and C-Suite Executives from ASFI member and Advisory Committee organisations earlier this month. During his address, the Treasurer announced the release of a consultation paper for an Australian climate risk disclosure framework, tasked the Department of Treasury to develop a whole of Government Sustainable Finance Strategy, increased support for the ASFI-led Australian Sustainable Finance Taxonomy, and announced more ambitious engagement in global forums to support sustainable finance. In a demonstration of the Treasurer and finance sector’s willingness to work together to enable the finance sector to better support the climate, environment and social objectives of Australia, industry participants at the event issued a Joint Statement.

  • ASFI Member Canberra Visit. Representatives from 22 ASFI member organisations travelled to Canberra on Monday 5 September 2022 for a day of meetings and events with Government Ministers and senior officials. Assistant Treasurer and Minister for Financial Services, Stephen Jones, and Assistant Minister for Climate Change and Energy, Jenny McAllister, both acknowledged the critical role of the finance sector in achieving many of the Government's ambitions and expressed strong support for collaborating on the sustainable finance agenda.

  • Roundtables with the Minister for Environment. ASFI engaged with the Minister for Environment, the Hon. Tanya Plibersek MP, at two roundtables on private capital for biodiversity, including biodiversity and nature repair markets, and TNFD.

  • Your Future Your Super (YFYS) Performance Test. This year, ASFI is pleased to have supported research led by the Conexus Institute together with FTSE Russell and the Responsible Investment Association of Australasia into the impact of the Your Future Your Super (YFYS) performance test. The results demonstrate that YFYS is currently constraining the ability of superannuation funds to implement strategies consistent with ESG, sustainability and carbon transition activities. The paper underscores the need to ensure that financial policy and regulation in Australia does not inadvertently hinder the pursuit of broader goals. You can read the full paper here.

  • ASFI Submission to the National Housing Finance and Investment Corporation mandate. In November, we supported the proposal to expand the NHIF mandate and made suggestions for how public funds can be used to better mobilise institutional finance and investment into social and affordable housing. You can view the submission here.

  • ASFI Submission to the Development Finance Review. In September, ASFI was pleased to make a submission to the Australian Government’s Review of Development Finance. The submission recommends that the Australian Government develop a dedicated international blended finance capability. “Blended finance” is the use of public money to increase private sector finance and investment in sustainable development. A new blended finance capability focused on the Asia-Pacific would enhance the Australian Government’s ability to mobilise private finance and investment into activities, companies and infrastructure that provide jobs and improve livelihoods in our region.This would amplify the impact of Australia’s aid program, helping countries to meet their development and climate goals and positioning Australia as a “partner of choice” in our region.

2022 Events

Australian Sustainable Finance Summit

  • On Friday October 28th, 2022, we were joined by over 250 attendees at the Sheraton Grand for our inaugural Australian Sustainable Finance Summit. The all-day event included keynote speeches, Q&As and panel sessions with leaders from across the public, private and not-for-profit sectors, including the Hon. Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, Dr Darian McBain, Senior Advisor to the Monetary Authority of Singapore (MAS), and Helen Rowell, Deputy Chair of APRA. 

  • Highlights from the day included: “It’s the role of insurers to price the risk, but it’s government’s role to reduce it" - Stephen Jones; "While it’s barely possible to open a newspaper or attend a business conference without climate risk coming up, the response remains hampered by the lack of information on [climate risks]." - Helen Rowell; “The debate is now squarely on the how – we’ve done the why and the what, and we’re in the how...That is really ripe for task-oriented collaboration." - Anna Skarbek (CEO, Climateworks Centre).

  • A full recap of the event is available on our website.

 ASFI Member and Partner Workshops

  • In the lead up to the Australian Sustainable Finance Summit, ASFI held a number of member and partner workshops and events on October 27th. This included an incredibly insightful cultural heritage tour through the Sydney Royal Botanic Gardens, where guests learnt about Gadigal history, traditions and ongoing connection to culture, country and community. Colonial history was re-examined through an Indigenous lens and plants and landmarks of the Harbour and Botanic Gardens explored. The day culminated in a networking drinks event at Terrace on the Domain attended by ASFI members and partners, as well as others from across the finance sector.

  • TNFD Workshop. Co-hosted with KPMG, ASFI members and partners including from RIAA, ACSI, IGCC and the Australian Government, came together in person and virtually to talk through “what’s next” in the piloting of the TNFD beta framework. This included a teaser of the third beta version of the TNFD framework, which has since been released.

  • Leadership Workshop. ASFI held the first meeting of our leadership working group, with 12 ASFI member organisations participating. This working group provided the opportunity for ASFI members to share their experiences, challenges and successful strategies for transforming their organisations to implement their sustainability commitments and continue to raise ambition in this area.

  • First Nations Workshop. ASFI held our first First Nations Partners workshop with First Nations groups, leaders and other experts working on First Nations finance. The purpose of the workshop was to showcase and amplify the incredible work that First Nations people and organisations are already doing in this space. It also sought to explore opportunities for ASFI to unlock more progress in this area.

What's coming up in 2023

There are a number of events planned for 2023 which we welcome your participation in.

  • February (date TBC), online and in person. ASFI Taxonomy Roundtables.

  • November (date TBC), Sydney. Australian Sustainable Finance Summit

Thank you to all those who we have worked with this year, it has been a pleasure and we are looking forward to a great year for sustainable finance in 2023. Don't forget to follow us on LinkedIn and sign up to our newsletter to keep up to date with our 2023 priorities, which we will provide more detail on in the new year. In the meantime, we wish everyone a restful and relaxing break, and will see you again next year.

Isobella Halcrow
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