Overview
The Australian Government is working with the Australian Sustainable Finance Institute (ASFI) to develop a sustainable finance taxonomy.
The taxonomy is a technical tool. It will provide common definitions for sustainable economic activities in Australia and help direct private investment to activities that will support Australia's transition to net zero emissions. It will also help prevent greenwashing, where companies make misleading claims about their environmental outcomes.
Initial Development Phase
In this phase, ASFI is focusing on emissions reduction criteria in 6 important areas:
- Electricity generation and supply
- Minerals mining and metals
- Construction and the built environment
- Manufacturing and industry
- Transport
- Agriculture and land use
These sectors match those covered in the government's plans to reduce emissions.
The taxonomy will also include rules to protect the environment ('do no significant harm' requirements) and society ('minimum social safeguards').
Governance and oversight
The Council of Financial Regulators' Climate Working Group is overseeing the development phase. A group of experts (the Taxonomy Technical Expert Group) is providing direction and feedback.
Reporting
ASFI has given Treasury an interim report. An updated report will be provided once this phase is finished.