Australia’s financial firms want to turn capital markets green

LONDON: Australia’s largest financial companies are targeting net-zero emissions over the next 30 years as the global shift to a low-carbon economy gathers pace.

The Australian Sustainable Finance Initiative yesterday released 37 recommendations to help the financial sector target climate neutrality by 2050 and ensure it remains competitive.

They include setting interim carbon reduction targets when deciding lending, insurance and investments as the next decade will be critical to achieving the goal, according to the plan.

The road map from 80 Australian finance industry organisations, including banks, insurers and pension funds, comes amid demands for a so-called green recovery from the nation’s first recession in about three decades.

As one of the world’s biggest biggest per-capita polluters, Australia gets almost one third of its national income from industries exposed to economic disruption as the world shifts to a low-carbon economy.

“There is an urgent imperative for Australia’s financial services sector to act to remain globally competitive in a world increasingly prioritising a sustainable economy, ” the initiative’s co-chair Jacki Johnson said.

“We are seeking to re-orient capital – where capital is lent, what it insures and where it is invested – to supporting and building value today while strengthening the economic, natural and social assets that underpin our long-term prosperity.”

Prime Minister Scott Morrison’s government remains a staunch supporter of the fossil-fuel export industry, and has steadfastly rejected putting a price on carbon and is steering clear of the net-zero emissions goal that’s increasingly being adopted by countries around the world.

The initiative recommends financial firms lobby the government to align priority infrastructure projects with a low-carbon world, and work with energy regulators to expedite a plan to fix the electricity grid to cope with variable wind and solar power.

Other recommendations include working with financial regulators to embed sustainability into regulatory guidance and standards.

This also includes creating sustainable benchmarks and indexes; helping sustainability-focused businesses raise money in Australia’s capital markets and supporting their listing on the stock exchange.

It requires firms with more than A$100mil (US$73mil) in annual revenue and the 300 largest-listed companies to make climate risk adaptation disclosures against an international framework by 2023.

It has to stress test financial firms’ resilience to the physical and transition risks from climate change, and embed sustainability targets into executive remuneration and incentive packages.

Further, a permanent sustainable finance body is to be created next year to help deliver the road map. — Bloomberg

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