Leading investors including some of the nation’s biggest banks, superannuation funds, venture capital firms and asset managers have joined industry experts and government for the third Treasurer’s Investor Roundtable in Canberra.
The roundtables at Parliament House today on the net zero transformation, defence and social impact investment focused on identifying and unlocking investment opportunities that are in the national interest and that deliver strong returns to shareholders, members and the broader community.
This is all about aligning what’s good for investors and super fund members with what’s important for the future of our communities and economy.
Today’s discussions follow on from the first Treasurer’s Investor Roundtable on housing held in late 2022 and the second roundtable on the net zero transformation earlier this year.
Participants at today’s roundtables included some of the nation’s largest investors representing more than $2.5 trillion in capital, along with leaders across the three areas of focus.
Roundtable outcomes
1. Principles for sector decarbonisation plans
Participants agreed on a series of principles to guide six sector decarbonisation plans currently under development by the government to support Australia’s plan to achieve net zero emissions by 2050.
Principles agreed include that sector decarbonisation plans should be credible, clear and comprehensive, promote stability, be outcome oriented and drive practical action, be coordinated and integrated and be dynamic.
2. Net Zero Economy Authority’s investment facilitation role
Investment facilitation will now be one of the core functions of the government’s newly‑established Net Zero Economy Authority.
The NZEA will be responsible for identifying and coordinating opportunities to boost private capital investment in decarbonisation and the net zero economic transformation.
Engagement with roundtable participants will form part of the government’s consultation on the investment facilitation model adopted by the authority.
Members of the investment community and government will work together to identify opportunities to accelerate investment in Australia’s net zero transformation, considering ideas presented at the roundtable by some superannuation funds.
3. Reforming the superannuation performance test
The government will consult on options to improve the superannuation performance test so that trustees are held to account for member outcomes without holding back investment in economic priorities such as the net zero transformation and housing.
The test has helped lift the investment performance of superannuation funds by encouraging continual improvement or exit of underperforming funds.
However, there are concerns that the current test may be influencing investment decisions to the detriment of member outcomes, including discouraging investment in asset classes that can strengthen the economy, such as in housing and the net zero transformation, even where it would be in the best financial interests of members.
A consultation paper canvassing options to address these issues will be released soon.
4. Sovereign Green Bond Framework
The government will today release Australia’s Green Bond Framework ahead of the first issuance of green bonds in mid‑2024.
Sovereign green bonds will give private investors an opportunity to back public projects crucial to the transformation to cleaner, cheaper energy.
5. Sustainable Finance Taxonomy
The government will invest an additional $550,000 to partner with the Australian Institute of Sustainable Finance to further develop Australia’s first Sustainable Finance Taxonomy ‑ a set of common definitions and guidelines for investment that will remove barriers for superannuation companies and other investors to back sustainable projects and initiatives.
Once developed, a robust set of sustainable finance taxonomies will ensure sustainability definitions are credible, comparable and easy for investors, lenders and regulators to use to counter the rise of greenwashing, ensure transparency, and promote trust in the sustainable finance market.
6. Defence
The government will identify and assess options to partner with private capital to invest in eligible Australian small and medium enterprises that are developing the capabilities we need.
Expressions of interest from investors to participate in an investment fund will be sought through AusTender in 2024.
We will also look to reform procurement processes to make it easier to do business with defence, particularly for small and medium enterprises.
As part of its response to the Defence Strategic Review, the government will consider opportunities to invite private capital to invest in defence infrastructure and technologies.
7. Social Impact Investment
Participants signalled an ambition to grow their impact investing portfolios, with the Paul Ramsay Foundation announcing $60 million for its own evergreen concessional impact investing fund and committing 10 per cent of its liquid balance sheet to impact investments with market returns.
Westpac, Macquarie, the Minderoo Foundation and the Paul Ramsay Foundation agreed in‑principle to invest alongside government in social impact initiatives that deliver outcomes for communities and tackle disadvantage.
They will join other roundtable participants and sector stakeholders in contributing to the co‑design of the government’s $100 million Outcomes Fund announced in the 2023‑24 Budget with a view to identifying opportunities to coordinate and align investment in projects once the fund is established.
Westpac, CBA, Macquarie, ANZ, NAB, Rest and HESTA agreed to contribute expertise to support the social enterprise sector.
8. Working groups
Participants agreed to establish four working groups to continuously address barriers to investment in housing, the net zero transformation, defence and social impact investment.
Working groups will comprise investors, experts and industry, working closely with government.
Expressions of interest for members will be released in the New year.
Quotes attributable to Treasurer, Jim Chalmers:
“We’re bringing some of the most influential investors in the country around the table to get capital flowing to where it’s needed most in our economy in ways that deliver for investors and members.
“This is all about working together to modernise our economy and maximise our opportunities in the defining decade.
“Investing in our national priorities can present big opportunities for investors and big opportunities for Australians, their communities and their economy.
“We need more private capital in the net zero transformation, defence industry and social impact and we’ve made some great progress today by working collaboratively with the investment community.
Quotes attributable to Minister for Energy and Climate Change, Chris Bowen:
“Investment from the private sector is crucial to our economy’s transformation to net‑zero. Collaboration is key and we need to be all in, together. Government can’t do it alone, this must be a whole of economy effort.
“By bringing investors together like we have with today’s roundtable, we can drive change where it matters most in our economy.”
Quotes attributable to Minister for Defence Industry, Pat Conroy:
“This roundtable and the outcomes come at a crucial time as the government looks to modernise the defence industry in response to the Defence Strategic Review and the growing need to address the complex strategic environment and national security challenges we now face.
“The finance industry has an important role to play in building the sovereign capability we need to equip and maintain the Australia Defence Force now and into the future.
“Importantly, the discussions held today also pave the way for institutional investors, among others, to be involved in the production of world‑class defence technologies and platforms, presenting an opportunity for everyday Australians to have a stake in the defence of their nation.”