What Institutional Investors Need from Australia’s Sustainable Finance Taxonomy
3 December 2024
Australia is developing a taxonomy to help direct capital towards decarbonising the Australian economy.
Drawing on views from our climate solutions working group of members, we’ve provided some comments for the development process of Australia’s sustainable finance taxonomy.
The very short version is this:
From the taxonomy itself, institutional investors need:
- Companies to report on the percentage of their business activities that are included in the taxonomy (not just individual activities for which they are seeking finance)
- The taxonomy to show how it is compatible with frameworks in other global markets where institutional investors are also active
- Expansion of the taxonomy to include adaptation and resilience
Investors’ notes on the context and process:
- The taxonomy and the activities it seeks to describe need to sit within an overall 1.5°C aligned target, scenarios and economic pathways.
- Any expectations that companies self-assess against the taxonomy criteria should be ramped up over time, as opposed to starting all at once. (This will allow users to build their expertise over time).
- Ongoing consultation with investors in refining and launching the taxonomy will help it succeed.
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