Assistant Treasurer Stephen Jones said the Australian Office of Financial Management will support the move towards green investment by entering the market with capital and clout of the government and its AAA rating.
Mr Jones was speaking to the Australian Council of Superannuation Investors and said the government wants to “put out the biggest possible lure” to attract more green capital to Australia.
“Investors also need a common language a standard to measure what is green and what is sustainable so we are working on a sustainable finance taxonomy,” he said.
“We’ve spoken before about the critical role we see for a taxonomy – one that aligns with global standards but has an Australian accent.
“Capital markets can’t work efficiently unless there is transparent and credible information – and Australia can’t sit back while new rules about what is green and sustainable are written offshore. So, a taxonomy is critical.
“It will provide common agreed standards and definitions about the sustainability characteristics of different investments.”
Mr Jones said the Australian Sustainable Finance Institute (ASFI) describes the taxonomy as a ‘foundational piece of the sustainable finance architecture but it is complex and will take time and collaboration to get it right.
“During the next 12 to 18 months, the government will provide direct support to ASFI to co‑fund the initial development phase for an Australian sustainable finance taxonomy,” he said.
He said the Council of Financial Regulators’ Climate Working Group, which includes Treasury, will oversee this initial phase.
“This will ensure there is direct input from government, helping to align the taxonomy development with our broader sustainable finance policy objectives and wider market and regulatory trends,” he said.
Greenwashing is also in the crosshairs, he said, and ASIC has already started to move on penalising financial institutions that have committed the offence.
“Greenwashing is already one of ASIC’s priorities – market participants are acutely aware of this focus. In fact, it is central to the development of credible sustainable finance markets,” he said.
“We want investors to see the opportunities in green investment. They can only do that if they know the market is fair dinkum.”
He said the government also has plans to develop an Australian climate risk disclosure framework.
“For all the reasons we’ve been talking about, around investor confidence in the transition to net zero, there’s broad support for mandatory climate disclosure requirements,” he said.
“Essentially, they will provide investors with credible and comparable information.
“Our initial view is that mandatory reporting requirements should be phased in over time – both in terms of entities covered and the reporting that is required.
“The most contested issue was whether or not the existing liability settings for forward‑looking financial statements are appropriate in the context of climate‑related reporting.”
