Sustainable Finance event - remarks by Kristian Fok, Chair ASFI

I’m Kristian Fok. In my day job I am Chief Investment Officer at Cbus Super. I also have the honour of being the inaugural Chair of the Australian Sustainable Finance Institute (ASFI).

• And in that capacity, I am pleased to welcome you all here this evening to ASFI’s inaugural Sustainable Finance @ The House cocktail event.

I want to make some brief remarks, before handing over to our special guest, Assistant Minister for Climate Change and Energy, Senator Jenny McAllister

Australia’s financial system has a critical role in shaping Australia’s future.

Put simply, what gets financed is what gets done:

• From the investment in energy infrastructure that powers our homes and industry

• To finance that supports businesses of all kinds to grow, generating employment and delivering goods and services from agriculture to the share economy

• To the mortgages that everyday Australians rely on for home ownership.

The actions and activities of Australian financial institutions will significantly determine Australia’s ability to meet our climate goals, regenerate our incredible natural capital, and sustain a healthy, prosperous, and fair society.

Indeed, our climate, our environment and our lives are impacted not just by what gets financed but the way in which financial decisions are made

• Are investment decisions guaranteeing respect for First Nations’ rights and culture?

• Is capital being allocated to companies who are doing better on gender diversity on Boards and in management?

• Are financial institutions thinking about, measuring and managing the impact of their activities on people and the planet?

Recognising the critical role of the financial system, and recognising the risks inherent in failing to transition to a sustainable financial system, in 2019 a group of 140 representatives from organisations across the financial sector including asset managers, asset owners, banks, insurers, as well as civil society groups, academics, financial regulators and government, joined together to create an Australian Sustainable Finance Roadmap

The Roadmap puts forward 37 recommendations designed to align the Australian financial system with a sustainable, resilient and inclusive Australia, and channel more investment into sustainable, socially beneficial activities.

These objectives are consistent with a better future for all Australians, and with financial institutions’ obligations to properly manage risk and deliver return for beneficiaries and clients.

ASFI was established last year to drive and coordinate implementation of this Roadmap and work is well underway

• We are leading the development of an Australian Sustainable Finance taxonomy, to provide a consistent set of definitions to simplify investment decisions, enable more investment into sustainable activities, support high quality corporate disclosures, and prevent greenwashing;

• We are supporting the development of natural capital markets by upskilling financial institutions on natural capital and biodiversity and ensuring international frameworks, like the Taskforce on Nature-related Financial Disclosures, are fit for purpose in an Australian context

• We’re working across the industry to foster a culture of leadership that drives sustainability outcomes.

• And we’re tracking the progress of sustainable finance in Australia through our annual Progress Tracker

• We’re doing all of this work by bringing together government, the finance sector, industry organisations and universities – recognising that together we can achieve more.

Financial sector leadership is important, and that’s why we created ASFI. But the finance sector does not operate in a vacuum.

From the headline policy signals of international treaties and national emissions targets, to real economy policies to drive down emissions, to the nitty gritty of financial market regulation on issues like mandatory disclosures and benchmark indices – Government policy significantly influences decisions about where to invest and what to finance

Internationally, many comparable jurisdictions are rapidly moving towards comprehensive alignment of financial policy and regulation with sustainability objectives – climate, biodiversity, circular economy.

Australia can learn from international experience and introduce policies and programs that are globally aligned, but locally responsive – recognising Australia’s unique economic circumstances.

Not only will this support the Australian financial sector to manage sustainability-related risks and channel more capital where we need it – for example, to transform Australia into a renewable energy superpower.

Proactive policy-making will signal to the world that Australia is taking sustainability risks seriously, and help maintain access to cost-effective capital that is critical to support Australia’s economic competitiveness and domestic transition activities.

We are pleased to see strong signs that the Government is up for this challenge. For example:

• We welcome the legislating of national emissions targets as first step to creating the policy framework that will drive the economic transformation to net zero emissions

• We welcome the Governments’ commitment to introduce mandatory climate-related disclosures as one essential piece of the sustainable finance architecture

• We welcome the recent announcement by the Prime Minister that the Government will establish biodiversity markets to support the preservation and restoration of the natural ecosystems on which we all rely.

There is a lot of work to do:

• The IPCC Reports could not be clearer on the consequences of failing to decarbonise the economy and build resilience to climate impacts.

• The recently released State of the Environment Report sets out a stark reminder of the fragility of our natural ecosystems and the imperative to not only protect and restore natural capital but to better recognise its value to our communities and our economy.

• The Closing the Gap Report shows that while on some measures, progress is being made, on others progress has stalled or is going backwards. We need to foster genuine and meaningful partnerships with Aboriginal and Torres Strait Islander peoples at all levels of government, business, and society.

It is imperative that all actors push in the same direction. That is why I am so thrilled to be hosting an event that brings together senior leaders from Australia’s leading financial institutions committed to the sustainability challenge, with members of Parliament, and key representatives from the Australian policy community

To make new connections and explore opportunities to work together towards the achievement of mutual goals for a sustainable, resilient and inclusive Australia.

ASFI’s vision is bold. But the alternative is intolerable – for our members, for our clients, and for our country.

We look forward to partnering with each of you and with the broader community across the finance sector, public sector, and civil society to make this vision a reality.