Comprehensive consideration of systemic sustainability risks will require strengthened corporate disclosure requirements, clarifications of investor fiduciary duties, and better frameworks for effective stewardship. See further details below of PRI’s work supporting stronger sustainable finance policy in Australia.
At the PRI’s Sustainability Outcomes Forum in Australia, October 2023, signatories came together to share their experiences and practices in pursuing sustainability outcomes.
Five policy and regulatory reforms could help investors pursue environmental and social goals, and two further measures should also be considered.
Hosted by the PRI, the webinar will present the key findings from the Australian annex of the report “A Legal Framework for Impact”, which was authored by Freshfields Bruckhaus Deringer and commissioned by The Generation Foundation, PRI, and UNEP FI.
The PRI welcomes the Australian Government’s publication of the Australian Sustainable Finance Strategy. The collection of measures identified within the Strategy represent an important step forward in providing the frameworks, information and tools needed by investors to better integrate sustainability-related risks and impacts into their activities, and to contribute to Australia’s net zero transition.
The PRI welcomes Treasury’s proposal to implement mandatory climate-related disclosures aligned with IFRS S2 Climate-relate Disclosure Standards. The PRI also supports the six principles underpinning Treasury’s plan although considers improvements should be made to meet these principles and generate the comprehensive disclosures that investors need. Accordingly, the PRI makes several recommendations including in relation to covered entities, phased timing, scenario analysis, and transition plans.
The PRI-Coordinated Collaborative Sovereign Engagement on Climate Change recommends the benefits of an accelerated, orderly and Paris-aligned NDC for Australia’s sovereign climate risk profile, economic competitiveness and future cost of capital should be reflected by the Authority in its final advice to the Federal Government.
The PRI welcomes the Australian Government’s proposal to legislate an objective for the superannuation system, which includes the concept of sustainability. However, the PRI highlights that the proposed definition of “sustainable” is relatively narrow and potentially misaligned with existing duties. Accordingly, the PRI recommended the definition of sustainable better take into account the superannuation system’s reliance on a strong economy and its role in supporting the economy’s stability, as well as the environmental and social systems the economy relies upon.
The PRI welcomes APRA’s proposals to update SPG 530 and clarify its expectations about how RSE licensees address ESG factors. Although the proposed amendments provide a much-needed update to the previous version, additional guidance is required to comprehensively align with current market practice and support RSE licensees to discharge their legal duties. The PRI therefore recommends that SPG 530 specifically references the need for RSE licensees to assess and mitigate system-level ESG risks and provide guidance on the investment and stewardship activities needed to do so, including through the intentional pursuit of sustainability-related outcomes.