Roadmap to transition economy to net zero emissions by 2050

Wednesday, 25 November, 2020

Roadmap to transition economy to net zero emissions by 2050

An unprecedented coalition of Australia’s financial services sector has promoted a transformation of the country’s financial system to prioritise prosperity for all, meet 21st century sustainability challenges and position Australia more competitively within international markets.

The Australian Sustainable Finance Initiative (ASFI) — comprising 80 organisations across major banks, insurers, super funds, civil society and stakeholders — has released a roadmap that sets out a bold plan to align Australia’s financial system to support a thriving Australian society, a healthy environment, and a strong and prosperous economy.

The roadmap calls for financial system participants to embed sustainability into their organisation’s purpose, strategy and leadership, and to support the transition of the economy to net zero emissions by 2050, consistent with international conventions including the Paris Agreement and the UN Sustainable Development Goals.

The roadmap makes 37 recommendations that will enable the financial services sector — together with regulators and governments — to strengthen Australia’s financial system with the aim of recovering from the impacts of COVID-19 and delivering a transition to a net zero, resource-efficient and inclusive economy.

ASFI Co-Chair Jacki Johnson said, “The roadmap signifies a step change in how the finance sector does business. It provides a path towards a financial system that is better prepared to face future risks and shocks, such as a changing climate; to meet the current needs of Australians while delivering on long-term needs for a sustainable future; to enhance financial inclusion and wellbeing of all Australians, including our most vulnerable; and to direct capital to where it is most needed.

“Many of the challenges that Australia faces are global in nature and, beyond our borders, a major international shift is underway shaping capital flows. 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,” Johnson added.

“We are seeking to reorient 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.”

ASFI Co-Chair Simon O’Connor said, “As governments across Australia — federal, state and local — set a direction for a stronger and more sustainable nation, this roadmap is the financial services sector’s contribution to ensuring our sector is aligned with this future. As an industry, we are ready to lead and play our part.

“Recent events, such as bushfires, floods and drought, as well as COVID-19, have highlighted how locally and globally connected our economy, society and environment are.

“The financial services sector recognises the critical role it needs to play for Australia to recover from the pandemic and to prepare for our future challenges.

“We need to mobilise now to enable a prosperous and thriving economy, which can only be delivered while investing in a sustainable and resilient society, and healthy environment,” O’Connor added.

The roadmap’s 37 recommendations are focused on:

  • embedding sustainability into leadership
  • integrating sustainability into practice
  • enabling resilience for all Australians
  • building sustainable finance markets.

The roadmap has been developed collaboratively by more than 140 participants from over 80 organisations spanning Australia’s financial system, including financial institutions, civil society, academia, regulators and government. This has been done under the guidance of a steering committee comprising major banks, insurers, investors and civil society representatives, supported by financial regulators APRA and ASIC in observer roles.

In support of the launch of the Australian Sustainable Finance Roadmap, Cbus Chief Investment Officer Kristian Fok said, “Cbus is proud to have played a part in the development of the ASFI roadmap through our participation on the steering committee and working groups.

“ASFI will provide strong benefits in relation to creating common frameworks and taxonomies that can be applied across the financial services sectors, including alignment with global initiatives.

“Most importantly, implementation of the roadmap will help support better outcomes for our members as we transition to a more sustainable future.”

Emma Herd, CEO of the Investor Group on Climate Change, added, “We are witnessing an unprecedented global capital shift from the old economy to the new net zero emissions of the 21st century.

“The recommendations of the Australian Sustainable Finance Initiative provide a clear pathway for the finance industry to ensure it is keeping pace with this global shift and is well positioned for what will be one of the biggest investment opportunities in history.”

Principles for Responsible Investment (PRI) CEO Fiona Reynolds stated, “Australia is already well known on the global stage for its dynamic financial services sector and for having the world’s fourth largest pool of superannuation assets — assets that must be invested and managed over decades for the benefit of current and future generations. However, as the findings of the 2019 Royal Commission and other recent events have shown, our financial system must evolve before it can claim to function with the best interests of its customers and society more broadly at its heart.

“The recommendations outlined in the ASFI roadmap will help position Australia as a global leader in sustainable finance and ensure the country can fulfil its commitments under the Paris Agreement and the Sustainable Development Goals. The PRI encourages all of its Australian signatories to work with ASFI over the coming years to implement the recommendations in full.”

Delivery of the roadmap will be driven by a permanent sustainable finance body, to be established in 2021.

The Australian Sustainable Finance Roadmap can be found here.

Image credit: ©

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