Date posted: 21/02/2020

Submission on the Progress Report of the Australian Sustainable Finance Initiative

The Australian Sustainable Finance Initiative (ASFI) called for submissions in response to its Progress Report titled Developing an Australian Sustainable Finance Roadmap (the report). Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia (together referred to as both Accounting Bodies) provided a joint submission on 21 February 2020.

Both Accounting Bodies:

  • are strong advocates for an appropriate sustainable finance system, and we appreciate and agree that the Australian financial services sector is faced with a range of challenges in its journey towards this system. As such, we commend the ASFI for leading the conversation in this space.
  • suggest that the members of the ASFI first work towards implementing a sustainable finance focus within organisations that are part of the initiative to show that this outcome can be achieved, and influence their stakeholders (which could also include requesting that those parties begin adopting sustainable finance focuses). A sustainable finance focus needs to be embedded within the organisation, which can be achieved by providing key management personnel with sufficient and appropriate education.
  • agree that there remains a perceived narrow interpretation of a director's or fiduciary's duty to act in the best interests of an entity. Before any possible solutions are proposed, we consider it important to understand the reality and reasons behind this interpretation.
  • do not consider that additional mandatory disclosure is the best path forward. While regulation can sometimes provide a way to change behaviour, we caution against using this avenue to enforce compliance with organisations viewing sustainable finance as another 'tick the box' exercise. Rather, we consider the first step should be to better understand the reasons for a lack of disclosure of 'non-financial' information under the existing reporting frameworks, followed by regulatory monitoring and enforcement of the frameworks in place.
  • agree that there are gaps in availability of data and inconsistent frameworks to provide context for environmental and social considerations in decision-making. However, not all matters can be easily quantified, so a change is required in the way risk is assessed and valued, rather than continuing to rely on existing models.
  • encourage ASFI to continue working collaboratively with the Government for consistency and harmonisation of frameworks, and for the purposes of identifying any concerns or conflicts within the legislation.