Big Australian finance players sign on to fight climate change

The big four Australian banks, superfunds and insurance companies are taking climate change into their own hands by signing onto an initiative that aims to realign the sector to support better social, environmental and economic outcomes for the country.  

Launched on Wednesday, The Australian Sustainable Finance Initiative brings together leaders and executives from major banks, insurance companies, super funds, financial sector peak bodies, civil society groups and academia.  

The initiative includes a steering group, tasked with developing a plan on how the finance sector can help deliver international climate agreements, and transition to a more sustainable and resilient economy.

Co-chair of the initiative and IAG group executive Jacki Johnson, said the next decade was critical for managing climate change and other risks, and the finance sector needed to play a part in that.

“Australia has made a number of commitments to international targets. Achieving these goals extends beyond social or environmental objectives – it’s an economic and financial necessity,” Johnson said.  

“Our economy simply cannot prosper in an environment of ever-increasing severe weather events and the subsequent broader impacts these will have.”

The group will deliver a roadmap next year, outlining recommendations for the sector such as mobilising capital to assist with climate goals, embedding sustainability, climate and human rights considerations into financial markets and products, and delivering a financial system that meets consumer demand around sustainability.

Simon O’Connor, co-chair of the initiative and CEO of Responsible Investment Association Australasia, said there were parts of finance which wanted to invest more sustainably, but the policy and regulation was not there to support that.

“This is really an opportunity for us to give a big audit of all the policy regulations and legislation,” O’Connor told Pro Bono News.   

“If we can redirect some of those really important policy levers, that could unlock the finance sector to support Australia’s delivery of the Paris Agreement and the Sustainable Development Goals, and align for a more prosperous Australia.”

He said without the finance sector’s help and collaboration with other parts of society, Australia wouldn’t be able to effectively tackle climate change.

“A lot of investment will be required across transport, energy, and housing for us to head towards zero emissions by 2050 and that’s going to require capital to be flowing in the right direction,” he said.

“One way or another we need to get finance aligned with this objective, in the same way we need to get business, community and government aligned.”

Civil society leaders such as Anna Skarbek, CEO of ClimateWorks, will also be consulted via working groups.

O’Connor said this was something equivalent international programs did to ensure the recommendations delivered were consistent with the expectations of consumers and society.

“This is all about helping finance deliver what the community and consumers expect from finance, whether that’s about investments being more aligned with their values, or financial products that allow Australians to bank their money in a way that’s consistent with their values,” he said.

“It’s about the sector better understanding the preferences of Australians as that relates to sustainability, ethical, environmental and social issues. So to get that information, we need to be working with civil society to inform that process.”

He added they aimed to make the process of the initiative as transparent as possible by releasing a terms of reference and consulting with the public on the major areas of the program.

“To establish a steering committee, we went through a public expression of interest process with very clear criteria as to why we were choosing, and who we would choose around that table for the working group,” he said.

See the full list of members on the steering committee here.