The Australian Taxonomy
The Australian Sustainable Finance Taxonomy provides a common language for green and transition finance in Australia, to support the allocation of capital towards activities that enable Australia’s net zero ambitions.
What is a sustainable finance taxonomy?
A sustainable finance taxonomy is a classification and definitions tool that offers a science-based, consistent assessment of whether an economic activity is climate-aligned. Credible taxonomies create a common language between corporations and financial institutions.
They reduce transaction costs associated with case-by-case assessments of climate change mitigation credentials, supporting transparency and enabling objective verification of green and transition claims. Sustainable finance taxonomies strengthen investor confidence in claims, mitigate greenwashing, and make it easier to compare investment products and sustainability disclosures both within and across jurisdictions.
Why does Australia need it’s own taxonomy?
While the European Union taxonomy is viewed by many in the market as the benchmark taxonomy, it does not cover key sectors of importance to Australia, like mining, critical minerals and agriculture. The Australian taxonomy builds and expands on the EU taxonomy’s approach while covering key sectors including green mining, metals and minerals and agriculture and has an explicit focus on credible transition activities. It is also the first taxonomy in the world to set expectations for engagement with First Nations peoples and the management of cultural heritage.
You can find out more in this fact sheet.
Taxonomy Development & Implementation
The development of an Australian taxonomy for climate change mitigation was a joint initiative between the Australian Government and finance sector, led by the Australian Sustainable Finance Institute. The taxonomy is a key component of the Government’s Sustainable Finance Roadmap. It was informed by broad-based collaboration and extensive public consultation over twenty months, from July 2023 to February 2025.
The Australian taxonomy supports the credible allocation of capital towards Paris-aligned activities by:
Strengthening investor confidence in low-emissions investment claims
Reducing the risk of greenwashing
Improving the comparability of investment products and sustainability disclosures
The taxonomy is now available for voluntary use, and is currently being piloted by some of Australia’s largest financial institutions.
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