The Responsible Investment Association Australasia (RIAA) warmly welcomes the Australian Government’s Sustainable Finance Roadmap, which Treasurer Jim Chalmers has released today. RIAA has been calling for a national sustainable finance strategy for some years – this will enable Government agencies and the finance sector to successfully work together to deliver Australia’s urgent priorities, such as tackling climate change in line with the Paris Agreement and progressing the UN Sustainable Development Goals.

The Roadmap brings together key pieces of the puzzle to shift capital towards sustainable practices, with a strong focus on climate change. A coordinated approach should line up Government agencies to leverage finance in areas such as climate change, energy, agriculture, nature, regional development, infrastructure and regulation. The Sustainable Finance Agenda provides clarity and direction in key areas for capital markets, and will help Government better leverage private capital to support critical Australian Government priorities.
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• Transparency is key to good investment decision making. RIAA is encouraged by the implementation of mandatory climate disclosures, and calls on the Government to introduce broader sustainability disclosures using the International Sustainability Standards Board as a baseline, with a focus on Taskforce on Nature-related Financial Disclosures-aligned reporting and improving on current modern slavery reporting requirements.
• The Australian Sustainable Finance Taxonomy will articulate a set of common definitions for sustainable economic activities, which can be used to define sustainable investments. RIAA calls on the industry to make submissions on current and forthcoming taxonomy drafts to ensure the final taxonomy is credible, useable and internationally interoperable. RIAA is pleased to see strong support from the Australian Government for this important project. Clarifying taxonomy use cases within the financial and regulatory architecture is important, and RIAA urges the Government to do this without delay.
• As Convenor of the official Consultation Group for the Taskforce on Nature-related Financial Disclosures for Australia and Aotearoa NZ, RIAA is encouraged by the Australian Government’s intention to integrate nature-related objectives into the Whole-of-Government sustainable finance work. Members of RIAA’s Nature Working Group, which was established in 2021, want to ensure nature-related risks, impacts, opportunities and disclosures are front and centre of climate transition activities and economic activity more broadly. The establishment of Environment Information Australia is a great step forward to meeting data requirements. RIAA looks forward to working closely with the Government on this and other initiatives that ensure both industry and governments play their part in protecting and restoring Australia’s incredible natural environment, working in tandem with First Nations communities.
• A just and orderly transition is key to both achieving net zero and attracting capital. RIAA strongly supports the Government’s work on credible net zero transition planning, including sector pathways and internationally-aligned corporate transition plans.
• RIAA is pleased to be working with the government to develop a sustainable investment product labelling regime. RIAA’s 18-year-old Certification Program brings well-established expertise and industry knowledge to the process of establishing consistent labels and disclosure requirements for investment products marketed as ‘sustainable’ or similar.  Transparency and clarity are key to protecting Australians with super funds and investment portfolios from greenwashing. The regime must align internationally; support social and governance objectives in sustainable investing; introduce clear disclosure requirements; consider obligations for non-sustainable funds to disclose negative exposures (or adverse impacts); interact with the forthcoming sustainable finance taxonomy; draw on existing definitions; and comply with RIAA’s Certification Program standard.
• RIAA is pleased to note the recognition of climate change as a systemic risk – i.e. a wide-ranging risk that affects an entire economy or financial system. Along with things like biodiversity loss, inequality and geopolitical uncertainty, tackling climate change requires a system-wide approach. RIAA is encouraged to see an approach to tackling climate change that brings in a number of government bodies, including regulators, together with policymakers.
• Accurate data is key to robust disclosures on sustainability issues, which in turn supports strong and long-term investment decision-making. RIAA supports the Government’s and Council of Financial Regulator’s work to ensure the data and analytical requirements of investors are reflected in its work to address key sustainability-related data challenges.
• While RIAA supports the use of a performance test to help safeguard the retirement savings of Australians, the annual superannuation performance test currently disincentivises the superannuation sector from investing outside of a limited universe that tracks carbon intensive benchmarks.  It constitutes a regulatory barrier to long-term sustainable investment decisions and hence to shifting capital towards transition and low-carbon activities. It contradicts the stated objectives of the Sustainable Finance Roadmap and in this way works to undermine the other great work that the government is doing to support investment in the climate, energy and economic transition. Policy responses must be joined up. RIAA calls on the Government to implement appropriate amendments to the YFYS regime, and establish an independent multidisciplinary oversight body to ensure the ongoing relevance of the performance test, and that it remains fit-for-purpose in the future. Any new test should be sufficiently flexible to include nonclimate sustainability factors in the future. Any test should also be fit for long-term investment and respect consumer choice. Benchmark-hugging should be minimised and managed. The test should align with the sustainable finance taxonomy, as well as with RIAA’s financial product Certification Program, to ensure standards are lifted and maintained across the market.
• RIAA further welcomes the issuance of green bonds and the Australian Government’s commitment to international engagement to ensure international alignment, as RIAA has done, including through close involvement in developing internationally-accepted definitions for sustainable finance terminology.

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We should not stop here. First Nations’ voices and knowledge must be integrated into policy responses. Other reforms – such as the woefully inadequate protection for First Nations cultural heritage, longawaited reforms to the Environmental Protection and Biodiversity Conservation Act and due diligence obligations to identify, prevent and address modern slavery – must go hand in hand with the Sustainable Finance Roadmap that Treasurer Chalmers has released today. The implementation of the other recommendations of the Australian Sustainable Finance Roadmap, which RIAA’s CEO co-chaired and has a high degree of industry ownership should continue to be a strong focus for the sector and the Government. Non-climate sustainability objectives must also be tackled through joined-up, Whole-ofGovernment and industry-wide reforms.

For further information, please contact please contact Ada Tso, Marketing & Communications Manager, ada@responsibleinvestment.org, +61481308718