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ASFI Sustainable Finance Roadmap: Summary and key insights

Updated: Feb 1

By Anthony Schilt


In December 2020, the Australian Sustainable Finance Initiative (AFSI) published the Australian Sustainable Finance Roadmap - a 10-year plan for aligning Australia’s financial system with a sustainable, resilient and prosperous future for all Australians.

The below article summarises the Roadmap’s key features and insights.

The Australian Sustainable Finance Roadmap, by the Australian Sustainable Finance Initiative (ASFI), is a plan for aligning Australia’s financial system with a sustainable, resilient, and prosperous future for all Australians.

Australians need financial security, which must come from a system that is fair and provides the opportunity for growth and prosperity. Moreover, having a resilient environment to live in has never been more important than it is now. This is especially considering the catastrophic bushfires that took place in 2019-20, followed by the national outbreak of COVID-19 in early 2020.


The characteristics of a resilient economy include stability, flexibility, preparedness, and prioritization of meeting societal needs. The financial system plays a key role in such resilience, and the Roadmap sets a pathway on how to align the system so that it meets the needs of all Australians.

The Roadmap envisions an Australian financial system that: (1) is sustainable, resilient and stable, and can manage risk, shocks and strains; (2) accommodates present and future needs of all Australians, the environment and the economy; (3) makes informed decisions, taking into account sustainability risks, impacts and opportunities; (4) enhances financial inclusion, well-being and informed choice; (5) and utilizes capital flows in a way that supports Australia’s sustainable development goals.


To execute this alignment with the financial system to support a successful future for Australians, participants within the system must:

  1. support Australia’s deliverance on the sustainable development goals, the Paris Agreement, Sendai Framework for Disaster Risk Reduction and Convention on Biological Diversity;

  2. support transition to an economy with net-zero emissions by 2050;

  3. incorporate sustainability into leadership, purpose, strategy, risk management and practice of financial institutions; and

  4. enable the system to facilitate change by implementing collaborative practices all-around, including government, regulators, institutions, households and communities.

These practical recommendations, which are focused on the financial system entirely, must be seen from a holistic perspective. The transition to a sustainable system has already begun and is projected to continue over the coming decades. Driving transition calls for establishment of new structures and adaptation of existing ones, as there is substantial opportunity for the betterment of Australia’s social, environmental, and economic outcomes. There must be innate support for job creation, more resilient communities, a healthier environment and climate risk mitigation and adaptation.


Through the ASFI came more than 140 participants from over 80 organizations from Australia’s financial system. The Roadmap represents the collective output of a collaborative effort with the ASFI’s vision as its objective; it was developed through an inclusive, collaborative process with academia, government, financial institutions, industry bodies, regulators, and civil society. Its first phase of development focused on identifying critical challenges: (1) leadership, cultural and institutional structures; (2) consumer interests; (3) frameworks and standards; (4) decision-making and valuation; (5) unlocking sustainable finance and best allocating capital; and (6) policy, regulation, and supervision. The second phase recommended solutions to overcome these challenges.

ASFI’s primary focus in developing the Roadmap was identifying actions that could be taken by financial institutions.



Key Insights


1. Among the ASFI’s goals with their Roadmap is to organise capital flow in a way that helps facilitate an orderly transition to a net zero emissions, resource-efficient and socially inclusive economy.


2. Australia plays a leading role within the global financial system, as it contributes to global regulatory bodies that are focused on ensuring the stability of the global financial system.


3. Indigenous Australians are over-represented among financially vulnerable Australians. The Australian Council of Social Service (ACOSS) released a study showing that Indigenous people are between two to three times worse off than non-Indigenous Australians; nearly 30% of Indigenous households experience income poverty.


4. The Roadmap focuses specifically on recommendations that aim to support meaningful engagement between participants in the financial system and Indigenous peoples. It aims to support First Peoples self-determination and to improve their financial outcomes for a better quality of life.


5. The Roadmap’s development was undertaken through a thunderous period that included bushfires and the outbreak of COVID-19; this led to a decision that was made to postpone the release of the Roadmap until November 2020.


6. In the ASFI’s timeline for developing the roadmap, 2019 included: (1) establishing their steering committee and working groups; (2) research, consultation, and identifying critical challenges; (3) drafting recommendations; and (4) refinement of those recommendations. 2020 involves final consultations and refinement, and 2021 calls for the roadmap’s implementation and establishment of a permanent sustainable finance body.


7. The Roadmap’s 37 recommendations are made in alignment with Australia’s financial system for a sustainable, resilient, and prosperous future for all Australians; the recommendations fall under four categorized domains: (i) embedding sustainability into leadership; (ii) integrating sustainability into practice; (iii) enabling resilience for all Australians; and (iv) building sustainable finance markets.



Source

“Australian Sustainable Finance Roadmap.” Australian Sustainable Finance Initiative, Responsible Investment Association Australasia, 2020,

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