Local green banks say they need new rules to help finance an energy transition. 

The Responsible Investment Association of Australasia - which represents sustainable finance groups - is calling on the Albanese Government to bring in new policies to support sustainable financing of its commitments on climate change, infrastructure projects and affordable housing.

“There’s a whole lot this government can do to unlock and align finance behind its agenda,” RIAA chief executive Simon O’Connor says.

“Australia is suffering from being a policy taker, we’re not shaping and informing policies globally.”

Some of the work is underway already, with authorities currently working on an Australia-specific sustainable finance taxonomy to give clear definitions of what constitutes “green”, “sustainable” and “transition” finance. This is seen as necessary because Europe’s taxonomy, which forms the basis of Australia’s sustainable financing, is strict around transition finance, with no room for new oil and gas.

A more regionalised taxonomy should help Australia align with Asia’s net zero emissions 2050 targets, which include more fossil fuels than Europe’s 2030 targets.

Mr O’Connor says the next step would be to adopt the International Sustainability Standards Board recommendations, which will include rules around carbon disclosures.

Other suggestions include a call for Australia to legislate to mandate carbon disclosures, in line with its international peers. 

This would force banks to disclose how much carbon is emitted from everything that they finance, from mortgages to car loans and across all the businesses to which they lend.