New Report Says, More Clarity Required to Assist Australian Investors Pursuing Sustainable Goals
The Principles for Responsible Investment (PRI), UNEP FI, and the Generation Foundation released a new report on the policy impediments limiting institutional investors' capacity to achieve sustainability goals in Australia, along with policy recommendations.
The publication, "A Legal Framework for Impact, Australia: Integrating Sustainability Goals Across the Investment Industry," builds on the groundbreaking 2021 report "A Legal Framework for Impact" (LFI), which examined the extent to which investors can pursue sustainability objectives legally and options for policymakers seeking to assist investors in doing so across 11 jurisdictions.
The 2021 report, commissioned by the PRI, UNEP FI, and the Generation Foundation and authored by law firm Freshfields Bruckhaus Deringer, discovered that in all 11 jurisdictions, including Australia, investors are broadly permitted by their regulatory environment to consider shaping the sustainability outcomes of their investments where doing so would support their financial return objectives.
The report, however, identified a lack of adequate clarity, guidance, and instruments to assist investors in determining sustainability outcomes. The LFI initiative is now producing reform roadmaps in five jurisdictions: Australia, Canada, the EU, Japan, and the United Kingdom.
The most recent Australia-focused report makes such recommendations to help mainstream investors get behind an effective, whole-of-economy net-zero transition and address major sustainability concerns in the best interests of customers and fund members.
David Atkin, CEO of the PRI, said:
“Australia is yet another G7 country that is taking on climate change. With a new government on board, we expect a lot of policy reforms this coming year that will bring the Australian market closer to leading economies on sustainable finance reform. Sustainable finance is not optional, and climate change cannot be put on hold.
“Fundamentally, fighting climate change and building a prosperous and resilient future start with reform of the law: of how investors’ duties are understood by market participants; of how active ownership is facilitated; and how beneficiary interests are understood and managed. This is one of the key aims of the Legal Framework for Impact project – to propose policy changes that will shift the baseline of financial regulations and that can help responsible investors reorient capital flows on a workable, inclusive path to net zero.”