This report is the Australian Sustainable Finance Institute’s (ASFI) first annual assessment of progress under the 2025-2027 Sustainable Finance Action Plan, launched in May 2025 to support economy-wide action to mobilise sustainable capital. The Action Plan sets out 26 priority actions across eight domains — sustainable finance policy and regulation; alignment of regulatory settings with sustainability; national targets, plans and policies; data and reporting; financial innovation; leadership and culture; capability; and international engagement and collaboration — to ensure Australia’s financial system supports a sustainable, resilient and inclusive economy.

The report contextualises progress against a backdrop of geopolitical turbulence, a reversal of US climate leadership, and Europe’s sustainable finance recalibration, while noting that global clean energy investment reached US$2.2 trillion in 2024 — double the spend on oil, gas and coal. In Australia, the Albanese Government’s 2035 NDC target of 62–70 per cent below 2005 emissions, the Net Zero Plan, and six sector decarbonisation plans are assessed as credible but insufficient, with current policy settings projected to fall 11 per cent short of even the lowest bound of the 2035 target.

Progress against the Action Plan is rated across three tiers. Areas of good progress include the launch of Version 1 of the Australian sustainable finance taxonomy (June 2025), sustainable investment product labelling reforms, the 2035 NDC, and sustainable finance capability building. Areas of some progress include mandatory climate disclosure implementation, competition law guidance, blended finance, and First Nations equity partnerships. Areas of limited progress include explicit sustainability in directors’ duties and regulator mandates, capital flows into adaptation and nature, digitisation of sustainability reporting, and embedding sustainability into corporate purpose statements and organisational KPIs beyond climate.

• Key priorities for the year ahead include strengthening carbon pricing through the Safeguard Mechanism, expanding the taxonomy to adaptation and nature, deploying blended finance for resilience and First Nations economic participation, reforming the Your Future Your Super performance test, and developing a coordinated clean-export strategy.
• ASFI’s members — including major banks, superannuation funds, insurers, and asset managers — collectively hold over AU$16.5 trillion in assets.