The core design principles for the Australian taxonomy are credibility, usability, interoperability, and prioritisation for impact. These design principles also informed the governance arrangements for the Australian taxonomy’s development phase.
Australian Sustainable Finance Taxonomy Project Governance
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Taxonomy Project Governance Overview
The Australian Council of Financial Regulators’ Climate Working Group (CWG) oversaw this phase of taxonomy development, as part of its role supporting the development and implementation of the Government’s Sustainable Finance Strategy.
The CWG and ASFI agreed on a terms of reference, which set out the key design principles and outputs for the initial development phase. Led by Treasury, the CWG reviewed outputs and provided feedback on the taxonomy’s development to facilitate alignment with the Government’s key sustainable finance policy objectives, and wider market and regulatory developments in sustainable finance.
ASFI, with endorsement from the CWG, established a Technical Expert Group (TTEG) through an open expression of interest process. The TTEG comprised 25 experts in sustainable finance; whole-of-economy decarbonisation; climate and environmental science and policy; human rights; and Indigenous rights and perspectives. This group provided strategic direction over, input into and endorsement of taxonomy products for consideration by Government. The TTEG has delivered on its mandate and has now been dissolved.
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.
Twenty-five senior leaders, endorsed by the Australian Council of Financial Regulators’ Climate Working Group, were appointed to the independent TTEG.
The Taxonomy Technical Expert Group (TTEG)
The TTEG was co-chaired by Guy Debelle, former Deputy Governor of the Reserve Bank of Australia and former Chair of the Australian Council of Financial Regulators’ Climate Working Group, and Emma Herd, who has deep expertise in developing, implementing and assessing sustainable finance taxonomies, including leading the taxonomy technical team that worked with ASFI on the initial design considerations and transition methodology for an Australian taxonomy.
The TTEG provided strategic direction over, input into and endorsement of the Australian sustainable finance taxonomy for consideration by government. The TTEG collectively represented a mix of skills and experience that were critical to informing the taxonomy’s development, including in sustainable finance; whole-of-economy decarbonisation; climate and environmental science and policy; human rights; and Indigenous rights and perspectives. The TTEG has delivered on its mandate and has now been dissolved.
The taxonomy project was a joint government-industry initiative to provide a common standard for green and transition finance, helping accelerate the allocation of capital towards sustainable activities to achieve Australia’s net-zero ambitions. Reflecting shared appetite across government, finance and industry for new frameworks to support sustainable finance markets in Australia, ASFI undertook the initial taxonomy development phase with co-funding and oversight from the Australian Government.
The taxonomy advisory groups brought together key stakeholders and experts from across policy, academia, civil society and industry to contribute technical insights and advice.
Taxonomy Advisory Groups (TAGs)
The taxonomy advisory groups helped to shape:
technical screening criteria for climate mitigation across the economic sectors that have been prioritised for development;
Do No Significant Harm criteria for those same sectors; and
the application of Minimum Social Safeguards under the Australian Taxonomy.
Taxonomy advisory groups provided input to and advice on the relevant work prepared by ASFI and its technical partners, led by the Climate Bonds Initiative, before presentation to the TTEG for consideration and endorsement.
The taxonomy advisory groups were constituted by ASFI and did not have decision-making powers over the taxonomy’s development, but were positioned to contribute expertise and valuable input at a critical stage in the Australian Taxonomy’s development.
