Taxonomy Expansion
ASFI is exploring the expansion of the Australian Taxonomy beyond climate mitigation to ensure capital flows support broader environmental and social objectives.
Expanding the Australian Taxonomy to adaptation and resilience
Stronger market infrastructure is required to enable consistent identification, assessment and financing of adaptation activities.
Expansion of the Australian Taxonomy is a key enabler to identify actions and activities across Australia’s economy that can reduce systemic risks and support capital allocation to adaptation and resilience solutions at scale.
ASFI’s has commenced scoping work to expand the Australian Sustainable Finance Taxonomy to adaptation and resilience.
The project will assess international approaches, develop a fit-for-purpose approach, identify priority sectors and activities for Australia, and produce a blueprint with clear recommendations for near-term technical development to expand the Australian Sustainable Finance Taxonomy to adaptation and resilience.
What the Australian Taxonomy could identify
Expanding the Australian Taxonomy to include adaptation and resilience criteria would help direct capital to a wider range of assets and activities across a range of sectors including:
Built environment
The taxonomy could identify adaptation and resilience upgrades for Australia's building stock, alongside the mitigation criteria that already support zero emissions energy and energy efficiency. This covers retrofits to existing homes and commercial buildings, and benchmarks for new resilient construction.
With clearer criteria, banks, insurers and financiers can offer new financial products to support these upgrades. This lowers the risk profile of Australia's building stock. In turn, it reduces insurance payouts, which eases pressure on premiums and government disaster recovery costs.
Capital investments by businesses
The taxonomy could identify assets and measures that help businesses adapt to climate change and manage disruption. This includes things like water efficiency equipment or infrastructure that make production facilities more resilient to physical climate risks.
Infrastructure
The taxonomy could identify large-scale adaptation and resilience infrastructure projects. This supports blended finance models that draw in private co-investment. Examples include flood protection for coastal communities, and upgrades to road, rail and transmission networks to withstand severe weather.
Agriculture, land management and nature-based solutions
The taxonomy could identify activities with adaptation and resilience benefits in agriculture and land management, such as regenerative practices, precision equipment and drought-resilient crops. This includes nature-based solutions that complement or replace built infrastructure. Examples include wetland restoration, revegetation, and reef restoration to protect communities and infrastructure from flooding.
Adaptation and Resilience Steering Committee
The scoping project is overseen by the Adaptation and Resilience Taxonomy Steering Committee, comprising senior representatives from across the finance sector, together with government and regulatory observers.
The Steering Committee will provide strategic oversight and guidance to help ensure the work is credible, usable, internationally informed and grounded in the realities of financial markets.
ASFI retains responsibility for project delivery and final decision-making in its role as project manager and custodian of the Australian Sustainable Finance Taxonomy.
ASFI will work with a Technical Advisory Group (TAG) and broader stakeholders to inform the taxonomy expansion scoping project deliverables. The TAG is comprised of members and observers from across the finance sector, policymakers, civil society and technical experts.
Additionally, ASFI will collaborate with jurisdictions across our region and in Europe and North America and engage in ongoing conversations with them to share information, approaches and lessons learned.
Steering Committee Members
Government & Regulatory Observers
Expanding the Australian Taxonomy to
nature-related objectives
Developing draft taxonomy nature criteria for agriculture, forestry and land management.
ASFI’s first taxonomy expansion research report — Integrating Nature into Finance — was commissioned by the Department of Climate Change, Energy, the Environment and Water (DCCEEW), with strategic support from the Commonwealth Treasury and the Department of Agriculture, Fisheries and Forestry (DAFF), to explore how the taxonomy could expand to include nature-related objectives.
The report explores science-based methods for developing draft taxonomy nature criteria for agriculture, forestry and land management, providing a pathway for capital to flow into practices that protect biodiversity, strengthen agricultural productivity and build long-term resilience.
Research was guided by senior officials from Treasury, DCCEEW and the Department of Agriculture, with input from major agricultural lenders, including the world's leading specialist bank for food and agribusiness Rabobank, financial institutions, superannuation funds, First Nations organisations, and leading environmental groups.
This rigorous process has ensured that the research outcomes reflect diverse expertise and exhibit broad market credibility. It marks an important step toward integrating nature-related objectives into financial decision-making and supporting Australia's commitments under the Kunming-Montreal Global Biodiversity Framework and Australia’s Strategy for Nature 2024-2030.
