Leading Australian financial institutions and finance industry peak bodies have made a joint statement on the Australian Government’s proposed Safeguard Mechanism reforms
Read the Full Joint Statement.
As well as finance industry peak bodies ACSI, ASFI, IGCC and RIAA, the joint statement has been signed directly by institutional investors including Aware, Cbus, HESTA, First Sentier, IFM, Metrics, and Ethical Partners.
These organisations represent more than 500 investors, banks, insurance firms and financial service providers who collectively hold over USD$29 trillion assets under management.
The statement welcomes the Government’s proposal to reform the Safeguard Mechanism, while noting that the emissions reductions required under the Safeguard Mechanism are not yet aligned with the reductions needed to limit global warming to 1.5°.
Therefore, the Safeguard Mechanism should be a floor, not a ceiling, to facilities’ decarbonisation activities.
The statement proposes three recommendations for measures that would complement and bolster the proposed Safeguard Mechanism reforms:
- Large firms, including all those with facilities captured by the Safeguards mechanism, be required to develop and publish transition plans in line with guidance to be developed by the Government.
- The Government task the Climate Change Authority, with clear terms of reference, to develop by mid 2024 1.5 degree aligned sector targets and pathways to 2050, in consultation with relevant stakeholders.
- Future Safeguard Mechanism baselines align with 1.5° decarbonisation pathways.
For more detail on our support for the Safeguard Mechanism and complementary recommendations:
Read the Full Joint Statement.
Quotes
Rebecca Mikula-Wright, CEO, Investor Group on Climate Change
“Policy uncertainty has been the biggest handbrake for long-term investors, who are ready to invest in economy-wide decarbonisation.
“The Safeguard Mechanism reforms will give investors the confidence they need to start ramping up investment in sustainable Australian businesses and projects.
“The reforms are the next step towards the country’s 2030 targets, but they cannot be the last step.”
Kristy Graham, CEO, Australian Sustainable Finance Institute
“The Safeguard Mechanism reform is a step in the right direction: it should be passed. It will provide an important signal to international investors, lenders and insurers that Australian climate policy is continuing to strengthen and enable Australia to attract capital to support the climate transition.
“Requirements under the Safeguard Mechanism are not yet aligned with the reductions needed to limit global warming in line with the Paris Agreement. Future Safeguard Mechanism decline rates should align with 1.5 degree decarbonisation pathways. The Government should also take complementary action now to support firms to produce credible transition plans.
“It is important that flexibility mechanisms in the Safeguard Mechanism do not undermine the incentive to invest in decarbonisation. ASFI has recommended increasing the price cap for ACCUs consistent with a more realistic price of carbon.”
Louise Davidson, CEO, Australian Council of Superannuation Investors
“The Safeguard Mechanism will be essential in meeting Australia’s 2030 emissions reduction target by incentivising decarbonisation in heavy emitting industries, and the legislation represents positive policy progression. It is important that policy design supports decarbonisation and promotes high quality offsets as an option of last resort.”
Simon O’Connor, CEO, Responsible Investment Association Australasia
“The climate crisis facing Australia is a ticking time bomb, putting our economy, financial system, and investors at risk. We need a strong Safeguard Mechanism to hold polluters accountable and deliver the certainty needed to transition to a low-carbon economy.
“RIAA sees this as an important step in promoting investment in non-polluting solutions, reducing emissions, and putting us on par with other countries and trading partners. But we need to get it right. The Safeguard Mechanism needs to align with the 1.5 degree target, and the Mechanism needs to be a floor, not a ceiling.”