Foreword

The Australian government’s 2024 Sustainable Finance Roadmap aims to mobilise private capital towards achieving net-zero emissions, focusing on modernising financial markets and maximising economic opportunities related to energy, climate, and sustainability. The roadmap emphasises providing high-quality information to the market and ensuring investor and company confidence in managing climate and sustainability risks.

Pillar 1: Improve transparency on climate and sustainability

The government is introducing mandatory climate-related financial disclosures for large businesses and financial institutions, commencing from 1 January 2025. It is also developing a sustainable finance taxonomy in partnership with the Australian Sustainable Finance Institute (ASFI) to guide investments towards sustainable activities. Additionally, guidance on best practice transition plan disclosures will be developed, and consistent labels and disclosure requirements for investment products marketed as ‘sustainable’ will be established.

• Priority 1: Implementing mandatory climate-related financial disclosures for large businesses and financial institutions.
• Priority 2: Developing an Australian Sustainable Finance Taxonomy in collaboration with the Australian Sustainable Finance Institute to direct private capital towards sustainable practices.
• Priority 3: Supporting credible net zero transition planning by implementing mandatory climate-related transition plan disclosures for large companies and financial institutions, effective January 2025.
• Priority 4: Developing sustainable investment product labels to standardise labelling for ‘sustainable’ investment products including managed funds and superannuation systems.

Pillar 2: Financial system capabilities

The Australian Securities and Investments Commission (ASIC) is prioritising sustainable finance and will focus on supervising and enforcing governance and disclosure standards to reduce greenwashing. The Council of Financial Regulators (CFR) is expanding its work on climate and sustainability-related financial risks, including conducting Climate Vulnerability Assessments. The roadmap also addresses data and analytical challenges related to sustainability data and explores options to refine the annual superannuation performance test to better incorporate sustainability considerations.

• Priority 5: Enhancing market supervision and enforcement to tackle greenwashing and promote sustainable finance.
• Priority 6: Identifying and responding to systemic financial risks through the continued work of the Council of Financial Regulators’ Climate Working Group and the Australian Prudential Regulation Authority (APRA).
• Priority 7: Addressing data and analytical challenges through the work of the Council of Financial Regulators with a focus on the key areas of accessibility of corporate climate data, estimation of scope 3 emissions, and data on physical, transition-related and nature-related climate risks.
• Priority 8: Ensuring fit for purpose regulatory frameworks that effectively incorporate sustainability risks in accordance with ASIC and APRA guidelines.

Pillar 3: Australian Government leadership and engagement

The government is issuing green bonds to mobilise climate-aligned capital and support sustainable finance markets. It is also increasing international engagement on sustainable finance to promote consistent global standards and interoperable frameworks.

• Priority 9: Issuing Australian sovereign green bonds in accordance with the Australian Government Green Bond Framework published in December 2023.
• Priority 10: Stepping up Australia’s international engagement on sustainable finance to promote the harmonisation of global frameworks that will cater to Australia’s economic considerations and not inhibit cross-border investment.

Key reform timeline

The roadmap outlines a timeline for key reforms, including finalising climate-related disclosure standards, developing the sustainable finance taxonomy, publishing guidance for transition plan disclosures, and implementing a sustainable investment product labelling regime.