Leaders from Australia’s major banks, insurers, super funds and the community have formed the Australian Sustainable Finance Initiative (ASFI), a cross-sector forum to ensure the nation’s finance sector drives better social, environmental and economic outcomes. ASFI — whose members manage directly or represent members who manage trillions of dollars of assets globally — was announced in March, modelled on recent international practice including the European Union’s High-Level Expert Group on Sustainable Finance (HLEG) and the UK’s Green Finance Taskforce.
In what it says is a “critical decade” ahead, ASFI will recommend pathways and policies to enable the financial services sector to contribute systematically to the transition to a more resilient, sustainable economy, aligned with agreed global goals such as the Paris Agreement on climate change and the 17 UN Sustainable Development Goals.
It will be guided by a steering committee of 18, which includes senior executives from Australia’s big four banks, investors and insurers. They include Mark Joiner, chair of QBE Australia Pacific, Mark Senkevics, head of Australia and New Zealand for Swiss Re, John Hewson AM, chair of the Business Council for Sustainable Development Australia, Anna Skarbek, CEO of ClimateWorks, Emma Herd, CEO of the Investor Group on Climate Change, Damien Walsh, MD of Bank Australia, and David Atkin, CEO of Cbus. Geoff Summerhayes, executive board member of APRA, and Eric Usher, head of the UN Environment Program Finance Initiative, will act as observers on the committee. Working groups are being established to bring in specific expertise.
ASFI co-chair Simon O’Connor, CEO of the Responsible Investment Association Australasia, says issues such as climate change and human rights have become material to business and the financial services community. “The financial services sector is exposed to those risks, as well as having an essential role in funding and underwriting a future Australia,” he says.
Co-chair Jacki Johnson, outgoing IAG People, Performance and Reputation group executive, says achieving the goals extends beyond social or environmental objectives and has become an economic and financial necessity.
“As we approach 2020, we are rapidly entering a critical decade for managing climate change and other risks,” says Johnson. “Our economy simply cannot prosper in an environment of ever-increasing severe weather events and the subsequent broader impacts these will have.”
Meeting the goals requires government policy and commitment as well as business and finance leadership. “Achieving these goals presents a sizeable economic and social opportunity,” she says.
The European Union’s HLEG, which reported in early 2018, led to the European Commission’s Action Plan: Financing Sustainable Growth. It estimated that to achieve the EU’s 2030 targets agreed in Paris, including a 40 per cent cut in greenhouse gas emissions — about €180b ($283.8b) of additional investment is needed each year.
The Green Finance Taskforce, which began in 2016, has driven initiatives to build on London’s role as a financial hub and develop as a centre of the rapidly growing “green” finance sector. In 2018, it recorded US$167.6b ($235.9b) in climate bond issuance.
The ASFI will issue its Sustainable Finance Roadmap report by 2020.