Australia has followed the lead of Europe, the UK and Canada with the establishment of a new high-level collaboration of industry experts tasked with developing a sustainable finance roadmap for Australia’s economy.
Launched today as the Australian Sustainable Finance Initiative, the Commonwealth Climate and Law Initiative’s Australian Convenor and Head of Climate Risk Governance at law firm MinterEllison, Sarah Barker, was among the 18 experts from banks, insurers and industry groups appointed to the group’s steering committee. The appointment is recognition of Barker as one of the leading global experts on climate risk governance and the legal implications of climate change for companies and directors.
Barker said: “It seems that every day is bringing another new development in sustainable finance and climate-related financial risks. From energy policy, to mining development approvals, prudential and securities regulation, shareholder resolutions and misleading disclosure claims, sustainability and climate change have become relevant to – and material for – a broad swathe of sectors across the Australian economy. With an issue this dynamic, it can be difficult for government, regulators and the financial sector to keep track of the implications. Australia joins the growing number of countries taking a proactive approach to building a sustainable finance foundation to their economies to set them up for the immense challenges ahead.”
The push for Australia to develop its own sustainable finance roadmap came from its financial sector, with over 300 banks, insurers and investors responsible for over A$10 trillion in assets calling for the development of the roadmap at a United Nations Environment Programme Finance Initiative conference in Sydney in June 2018.(1)
Earlier this month, the Reserve Bank of Australia joined Australia’s prudential and securities regulators APRA and ASIC in considering the implications of climate change through an overtly economic risk lens when Deputy Governor, Dr Guy Debelle, gave a speech on the relevance of climate change to the bank’s economic modelling processes. Dr Debelle emphasised that climate change is a core consideration in the discharge of its monetary policy on employment and inflation and its financial stability remits.(2) Geoff Summerhayes, Executive Board member at Australia’s prudential regulator APRA, Executive Committee Member of the International Association of Insurance Supervisors and Chair of the Sustainable Insurance Forum, will join as an observer on the steering committee, alongside a representative from the United Nations Environment Programme Finance Initiative.
Barker added: “Australia’s regulators are in lock-step approaching climate change as a financial risk issue. Investors and consumers across the globe are looking to the finance sector to take an active role in the transition to a low-carbon economy and delivering on the UN Sustainable Development Goals, and Australia is no exception.”
The group’s steering committee has a broad remit to consider what actions will be required by government, regulators and industry alike. The roadmap will set out a suite of recommendations which aim to reshape an Australian financial system that is aligned to the long-term needs of the society, the environment and the economy, in a way that sees capital flowing towards assets supporting a more sustainable economy and away from negatively impactful assets.(3) The steering committee is due to publish the roadmap within 12-18 months, with interim consultation in December.
The CCLI’s UK Convenor and member of the UK Green Finance Taskforce, Dr Ben Caldecott, said: “Australia has some of the world’s largest pension funds and banks. The Australian financial system can play a critical role in mobilising capital to support the transition to global environmental sustainability, as well as adopt the practices required to properly measure and manage a variety of environment-related risks, including those created by climate change. Doing so will make institutions more resilient and better aligned with the needs of their clients. We need to rebuild trust in the financial system and being more sustainable and more resilient is a key part of that journey.”
Notes to Editors
Australian Sustainable Finance Initiative Steering Committee members:
• Anna Skarbek, CEO – ClimateWorks
• Christina Tonkin, Managing Director Loans and Specialised Finance – Institutional – ANZ
• Damien Walsh, Managing Director – Bank Australia
• David Atkin, CEO – Cbus
• Didier Van Not, General Manager Corporate and Institutional Banking – Westpac Banking Corporation
• Emma Herd, CEO – Investor Group on Climate Change
• Eric Williamson, Executive General Manager, Corporate Finance – National Australia Bank
• Jacki Johnson (Co-Chair), Group Executive People, Performance and Reputation – Insurance Australia Group
• John Hewson, Chairman – Business Council for Sustainable Development Australia
• Mark Joiner, Chairperson – QBE Australia & New Zealand
• Mark Senkevics, Managing Director Head Australia and New Zealand – Swiss Re
• Matthew McAdam, Director Asia Pacific – Principles for Responsible Investment
• Michael Thorpe, Managing Director Institutional Banking and Markets – Commonwealth Bank of Australia
• Phil Vernon, Managing Director – Australian Ethical Investment
• Richard Brandweiner, CEO – Pendal Group
• Robynne Quiggin, Professor – University of Technology Sydney, Business School
• Sarah Barker, Head of Climate Risk Governance – MinterEllison
• Simon O’Connor (Co-Chair), CEO – Responsible Investment Association Australasia
• Geoff Summerhayes, Executive Board Member – APRA, Executive Committee Member – International Association of Insurance Supervisors, Chair – Sustainable Insurance Forum
• Eric Usher, Head of the UN Environment Program Finance Initiative, Economy Division – UN Environment
(1) For information on the 2018 UNEPFI Conference: Financing a Resilient and Sustainable Economy, see here. The Joint Statement from banks, insurers and investors in support of a sustainable finance roadmap released at the conference can be downloaded here.
(2). The full transcript of Dr Guy Debelle’s speech is available here.
(3) The terms of reference of the Australian Sustainable Finance Initiative are here.
Sarah Barker is Head of Climate Risk Governance at MinterEllison, one of Asia Pacific’s leading commercial law firms, and Research Affiliate at the University of Oxford Smith School of Enterprise and the Environment.
Dr Ben Caldecott is the Founding Director of the Sustainable Finance Programme at the University of Oxford Smith School of Enterprise and the Environment.
The Commonwealth Climate and Law Initiative (CCLI) is a research, education, and outreach project which examines the legal basis for directors and trustees to take account of physical climate change risk and societal responses to climate change under existing laws. Our founding partners are the University of Oxford, the Prince’s Accounting for Sustainability project and ClientEarth and we leverage cross-disciplinary perspectives from our global experts in academia and the legal, accountancy, business and scientific communities. We help to make visible the material risks of future climate liabilities on directors and trustees and equip these actors with the tools to improve climate change governance practice. This is key to motivating actions today that can reduce climate impacts in the future.