Momentum builds for a more sustainable finance sector

A new report shows more financial organisations are integrating sustainability into their business practices 

Australia’s finance sector has made good early progress aligning the nation’s financial system with a more sustainable future. But leaders say more work is needed to ensure the sector better serves the needs of financially vulnerable groups like First Nations peoples.

Last November, Australian Sustainable Finance Initiative (ASFI) released an industry-led roadmap calling on financial organisations to embed sustainability into their practices, help the transition to net zero, and support Australia to achieve the sustainable development goals (SDGs). 

ASFI has now published a report tracking progress on achieving the roadmap’s 37 recommendations, which were designed to reshape Australia’s financial system so it is more resource-efficient and inclusive amid the ongoing COVID recovery.

The report found there was promising momentum in the industry for organisations to integrate sustainability into practice – such as by measuring the social and environmental impact of investments – and support individual and community resilience against acute shocks such as COVID or bushfires.  

It noted several examples of organisations taking action, including NAB training bankers to identify climate-related financial risks, and HESTA and Australian Super using the roadmap to inform their ESG & Stewardship strategy.

ASFI co-chair Simon O’Connor told Pro Bono News he was pleased with the progress the sector was making so far.   

“It’s great to see just how many organisations and from different [industries] have stepped up to start implementing some of the recommendations of the roadmap,” O’Connor said.

“But even more than that, some important collaborations with civil society, academics, governments and regulators are also progressing really strongly.

“Because what we know from doing the work on the roadmap [is] that the only way we’re really going to deliver the goals of this is if action is taken across all stakeholder groups.”

Sector urged to better serve the needs of First Nations peoples 

The report noted that greater action and collaboration was needed to make further progress in several key areas – including building financial resilience for First Nations’ communities.  

“First Nations peoples are over-represented among financially vulnerable Australians and while the finance sector is making efforts to develop and implement Reconciliation Action Plans, this is still at an early stage of development,” the report said.

“It is anticipated that this will require a significant level of further collaboration and action to ensure that the financial sector serves the needs of First Nations people in a fair and equitable way.”

Responsible Investment Association Australia – of which O’Connor is CEO – and Reconciliation Australia have committed to develop a Reconciliation Action Plan Framework for the finance sector.

This would focus on how the finance sector engages with First Nations peoples, and ensure that racial equity and racial healing are further embedded within organisational structures and plans.

O’Connor said it was an area he was eager to see further progress in.

“We were really keen that First Nations voices and recommendations were deeply embedded in this report as one of the really core social sustainability issues for Australia to grapple with,” he said.

“Although there’s some really good early momentum there, there’s still a lot of work to do to really strengthen the contribution that the financial services sector can make to First Nations’ groups in Australia.”

ASFI will now also focus on establishing a permanent sustainable finance body to oversee the roadmap’s delivery and ensure it is implemented effectively.

O’Connor hopes to establish this ASFI body by mid-2021.

“We need this permanent body established to continue to drive this momentum and ensure we are delivering and accountable to the roadmap,” he said.                                   

“We’ve seen such momentum globally in the policy developments around sustainable finance, but we need a body that can help all of the sector navigate their way through this.”