Australian sustainable finance taxonomy gets underway

Appointment of expert group marks second stage of project

The Australian Sustainable Finance Institute (ASFI) has started the development phase of the Australian sustainable finance taxonomy with the appointment of the Taxonomy Technical Expert Group (TTEG).  

The TTEG is made up of 25 senior leaders, endorsed by the Australian Council of Financial Regulators’ Climate Working Group.

It collectively represents a mix of skills and experience, including in sustainable finance; whole-of-economy decarbonisation; climate and environmental science and policy; human rights; and Indigenous rights and perspectives

The independent TTEG will be co-chaired by Guy Debelle and Emma Herd.

Debelle is former deputy Governor of the Reserve Bank of Australia and former chair of the Australian Council of Financial Regulators’ Climate Working Group.

Herd has deep expertise in developing, implementing and assessing sustainable finance taxonomies, including leading the taxonomy technical team that worked with ASFI on the initial design considerations and transition methodology for an Australian taxonomy. 

The TTEG will provide strategic direction over, input into and endorsement of an Australian sustainable finance taxonomy for consideration by the government

The taxonomy project is a joint government-industry initiative that will provide a common standard for green and transition finance, helping accelerate the allocation of capital towards sustainable activities to achieve Australia’s net-zero ambitions

ASFI will undertake the initial taxonomy development phase, with co-funding and oversight from the Australian Government, reflecting what it said is “shared appetite across government, finance and industry for new frameworks to support sustainable finance markets in Australia”. 

Debelle said: “It is imperative that we develop a sustainable finance taxonomy that is fit for purpose in Australia at the pace and scale commensurate with the challenge ahead of us. The establishment of the TTEG and commencement of the taxonomy’s development phase marks an important first step.”

Herd added: “The Australian taxonomy will play a key role in guiding the transition of our economy, financial portfolios, companies and economic activities by providing clear and consistent definitions of what is classified as a sustainable activity.”

Over the next 12 to 18 months, the TTEG will provide input into and final approval of climate mitigation taxonomy screening criteria for priority sectors, and associated technical work on data requirements, methodology for incorporating transitional activities, minimum social safeguards and a ‘do no significant harm’ framework.  

The formation of TTEG marks the second stage of Australia’s sustainable finance taxonomy project, following the government’s pledge in March 2023 to co-fund the ASFI to lead the taxonomy’s development.

As secretariat, the ASFI will work with an international consortium of taxonomy and sustainability specialists led by global standard setter, the Climate Bonds Initiative, to prepare the technical products for the TTEG’s consideration, input and endorsement.