Introduction

The Australian Sustainable Finance Capability Framework outlines the essential skills required for sustainable finance professionals to address climate change, nature degradation, and the just transition. The framework emphasises the need for upskilling and reskilling across the finance sector to support emissions reductions, adaptation, and resilience efforts. The pilot version, developed through extensive domestic and international consultation, is open for feedback over 12 months, aiming to shape the second version through stakeholder engagement.

First nations and finance

The report stresses the integration of First Nations perspectives in finance, highlighting the importance of incorporating Indigenous knowledge and values into decision-making. Meaningful consultation with First Nations communities is crucial for promoting economic opportunities that align with traditional practices. A key concern is the lack of research and resources to educate the finance sector on these essential considerations. The report calls for dedicated efforts to ensure the inclusion of First Nations principles in finance, with ASFI viewing this as a fundamental aspect of the framework.

Audience and use

The framework is designed for use by financial institutions, education providers, and individuals. Financial institutions are encouraged to use the framework to guide the development of learning and development plans, helping standardise capabilities across the sector. Educational institutions should align course content to support the growing pipeline of sustainable finance professionals. For individuals, the framework offers guidance for focusing their own professional development.

The framework

The framework identifies core capabilities for sustainable finance, organised across three proficiency levels—emerging, intermediate, and advanced. The core of this framework is the sustainable mindset, surrounded by these various capabilities. These capabilities include:

• Sustainable mindset: A sustainable mindset is a crosscutting capability that underpins all areas of the framework. It focuses on systems thinking, ethical behaviour, urgency in addressing sustainability challenges, and effective communication. Finance professionals must prioritise long-term outcomes and engage stakeholders with clear and actionable sustainability goals.
• Sustainable finance strategy: Professionals need to integrate ESG considerations, investor stewardship, and scenario analysis into strategy development. At higher proficiency levels, professionals should oversee governance structures, monitor progress, and engage with key stakeholders.
• Sustainability risk management: This capability focuses on identifying, assessing, and managing sustainability risks, such as climate change impacts and ESG risks. Advanced professionals are expected to influence policy development and ensure sustainability risks are integrated into overall risk management frameworks.
• Transition planning: Organisations need to develop and implement credible net-zero transition plans. At advanced levels, professionals are responsible for ensuring governance structures oversee transition plans and capital expenditure is aligned with sustainability targets.
• Sustainable financial products: The framework highlights the incorporation of sustainability considerations, such as ESG factors and stewardship, into financial products like green bonds and sustainability-linked loans. At advanced levels, professionals should oversee the development of innovative financial instruments and ensure compliance with international standards.
• Sustainability reporting: Accurate and transparent reporting is essential for measuring sustainability outcomes. The framework stresses the importance of aligning reports with international standards and ensuring data accuracy. Advanced professionals are expected to develop and manage reporting strategies and oversee compliance with regulatory requirements.