12 December 2022

Address to the Australian Sustainable Finance Institute, Sydney


Thanks Kristy [Graham, CEO ASFI] and Kristian [Fok, Chair & Director ASFI] for the introduction and for the invitation to join you.

I acknowledge Gadigal country and its custodians – who have cared for this land for tens of thousands of years, and still care for it today.

I know I’ve rocked up about six weeks later than we originally planned – the Budget got in the way of our first attempt – but thanks for giving Stephen Jones the opportunity to speak with you then, and I’m really pleased that we get the chance today, before the year is out and at the perfect time.

Obviously, you’re across the Prime Minister’s announcement on Friday – making some meaningful, responsible and temporary interventions in the energy market to address the unreasonable and untenable price hikes that were forecast for households and industry – especially our manufacturers.

In summary:

A Commonwealth cap on gas prices.

A state cap on coal prices.

Up to $1.5 billion in electricity bill relief for households and small businesses.

And new investments in cleaner, cheaper more renewable capacity.

And our gathering today helps to highlight that these issues are all part of the same challenge – near term and medium term – and that we need to work on both fronts at the same time.

Both are about managing risks and grabbing opportunities, making the system more resilient and reliable and affordable.

And both these challenges have put into sharper focus the price we are paying today for the failures of the recent past.

Of course, the major contributor to high and rising energy prices right now is Russia’s invasion of Ukraine.

But that’s been exacerbated in no small part by a preceding decade of energy policy chaos and lack of investment certainty at home.

A failure to plan and prepare, which has left us more vulnerable than we needed to be to these international shocks.

So yes, we need to act now to tame and temper the severity of energy price rises – and we are.

But we also need to plan now, prepare now – for the energy market of the future, and the financial system of the future.

That’s what my colleagues and I have been thinking about and working on in recent months – Chris Bowen and Jenny McAllister, Katy Gallagher and Stephen Jones.

On the best ways to create an environment that attracts the kind of investment we need, when and at the scale we need it.

So that we can build an economy that’s more resilient to international fluctuations and shocks.

Cleaner and cheaper energy, acknowledging climate risks, sustainable finance frameworks – all of this is key to smoothing the path to net zero.

So, with that context, I’d like to spend my time with you this morning sketching out the Government’s priorities across these areas in the coming months.

First: implementing our election commitment to introduce climate risk reporting standards – something that will be foundational to well‑functioning capital markets in the future.

Second and related: building a broader sustainable finance strategy that helps the private sector finance the energy transition and the other big shifts required for net zero.

And finally: some of the initial actions we are progressing as a government in the short‑term, to do our bit.

Because for all the good will and good work going on, the energy transition will only succeed if there’s government leadership alongside it – something that’s been too absent for too long. 

And while there’s no risk of us running ahead of you any time soon –

It’s our ambition that through these reforms, we can catch up with you, then walk with you, and work with you, on a smooth and successful journey to net zero – one that finances the industries, jobs and energy of our future.

Global trends and Australia’s progress

I got the chance to talk to Mark Carney in October at a G20 meeting in DC –

And that meeting prompted me to dig out and re‑read his ‘tragedy of the horizon’ speech from 2015 – a seminal intervention framing climate change as a financial risk.

When I read it again, a few impressions struck pretty quickly.

The first was to be really impressed at his foresight – about where the world needed to go, and the institutions and actions needed to get there.

The second impression I got was that Mark could probably deliver that speech today, almost as it was written back then, and the same points – the same warnings, the same solutions – would still fit.

That’s not to say there’s been no progress, there’s been plenty.

And the global investment flows towards sustainability are now pretty staggering.

By 2025, Bloomberg projects that one third of assets under management globally – some US$53 trillion – will be ESG‑badged.

Financial institutions managing a total of more than US$100 trillion – including several represented here – have committed to science‑based net zero targets and transparency under the Glasgow Financial Alliance for Net Zero banner.

About 90 per cent of global GDP is now covered by a net zero target.

Financial regulators, policy makers, multilateral institutions, and industry are realising the potential of sustainable finance.

In Australia, the regulators have taken their responsibilities seriously, even when their federal government hasn’t.

They have backed in the Taskforce on Climate Related Financial Disclosures –

And by and large, investors and industry are on the ball as well –

With more than half the companies in the ASX200 providing some form of disclosure in the last financial year –

And around 70 per cent of the ASX200 market cap now covered by a net zero commitment.

So progress has been pretty good here, even without Commonwealth leadership.

But there is no escaping the hard truth that a lack of leadership has been a handbrake on new investment.

And as more and more capital markets and investors demand quality, comparable information on climate risks, any sort of guidance gap in Australia has the potential to quickly become an even greater investment gap.

As Carney said in that speech: ‘… once climate change becomes a defining issue for financial stability, it may already be too late.’

The reality is there’s no turning back, no use waiting until it’s too late.

Global markets are on the move, and countries left waiting will get wedged. 

We don’t have another decade to waste.

It’s crucial that we provide that leadership now – and we are. 

We’ve legislated our 2050 net zero target.

We’ve set out ambitious 2030 emissions reductions targets.

And we are developing and deploying our Powering Australia Plan, which will help provide the signals and certainty that markets need.

But if the financial system is going to play this much‑needed role mobilising capital and managing risks and opportunities in the transition –

Then we need a more co‑ordinated and more ambitious approach to risk disclosure and sustainable finance.

Industry and regulators have led the way so far, now their government needs to join them.

Climate risk disclosures

To do that, our first priority is getting the disclosure piece right. 

Although there’s still some work to do on the International Sustainability Standards Board framework – there’s now a broad consensus around it, which presents an opportunity for critical global consistency.

Investors need investable information, and Australian firms need to make credible disclosures to remain competitive in global capital markets.

Today we are taking the first step – releasing a consultation paper on the commitment we made to develop internationally‑aligned reporting standards.

The paper seeks initial views on questions like:

  • who must apply the new requirements and when
  • how they will interact with other financial reporting obligations
  • and what body will provide long‑term governance for these standards.

It’s our view that once developed, these disclosure requirements will start with the largest entities – most of which are already disclosing voluntarily and are well placed to lead the way.

And our initial view is that mandatory reporting requirements should be phased in over time – both in terms of entities covered and the reporting that is required.

Once we have your input, we’ll take that away, work on it more –

And come back with a more detailed proposal once that final ISSB framework has been released next year.

I won’t pre‑empt the consultations – we are genuinely interested in getting your views and in getting it right – but we are starting with some clear principles.

First, we think the standards should be mandatory for large firms.

Second, they should be aligned as far as possible with global standards.

And third, they should apply not just to firms, but to financial institutions as well – and there will be similar requirements for comparable Commonwealth entities.

I would say these three principles are largely uncontroversial.

Because there’s now broad acceptance that proper disclosure of these financial risks and impacts isn’t a nice‑to‑have extra.

This information is need‑to‑know – essential to mobilising the weight of our financial system behind the net zero transition.

Effective disclosure reforms will lay the foundations for better information architecture for markets.

This includes stronger reporting of other sustainability‑related risks, over time – consistent with the staged approach envisaged by the ISSB.

In particular, we – like many of you – are closely monitoring trends in nature‑related reporting, with Tanya Plibersek leading our wider agenda on nature, biodiversity and natural capital.

Sustainable finance strategy

To be an attractive destination for capital that increasingly values decarbonisation, we’ll need to do more than risk disclosure – we require a bigger and broader response.

You know that, your new government knows that.

Today I can flag that the Government will pursue a more ambitious and coordinated sustainable finance strategy in 2023, that goes beyond disclosure reforms.

This is something industry and investors have called for. It’s something our global counterparts and competitors are already doing.

And it’s something that’s long overdue for an economy and financial sector like ours, with such a large stake in a successful transition.

The Prime Minister has agreed that Treasury will lead the initial development of the strategy, working with other government agencies and consulting closely with industry.

They’ll come back with initial recommendations early next year, but to give you a sense of our thinking now –

I see the strategy as the vehicle to progress priorities and potential reforms in five key areas.

First: improving transparency, beyond the disclosure reforms – so the market has more credible and verifiable data to make investment decisions, and a sustainable finance taxonomy will play a key role in this.

Second: making sure our financial regulators and governance practices continue to move with the times – so that firms and regulators are well‑equipped to manage risk.

Third: confronting and cracking down on greenwashing – ensuring the credibility of sustainability‑related financial targets, products and investments – because credibility is everything.

Fourth: making sure the public sector is leading by example.

And fifth: elevating our international engagement, making an active and influential contribution in our region and across the globe. 

While it’s important that our agenda be ambitious, it doesn’t need to start from scratch.

A lot of work is already happening – what’s needed now is for the Government to bring that work together and to make some calls on how to take it forward.

Compared to many of our peers, we’re a few years off the pace when it comes to formalising a strategy of this kind – but there’s no reason we can’t catch up.

I want our work here to be tailored, targeted, and practical – taking the best insights and lessons from global experience, and advancing Australia’s agenda in a strategic way.

I mentioned the need for a taxonomy. This sits at the heart of sustainable finance policies in many other countries – already very prominent in the EU, but being progressed in the UK, in Canada, Singapore and elsewhere too.

Given how critical a proper taxonomy is to a credible sustainable finance agenda – to help investors align with climate targets, to attract capital that supports the transition, to support regulators tackling greenwashing – it’s so important that we develop our own.

As part of its work on the strategy, Treasury, consulting with industry, will advise on the best option for Australia and the best role for government.

Again, we’re fortunate that we don’t need to reinvent the wheel. I know ASFI has been doing some outstanding work on this, in fact I’ve already got a well‑worn copy of your first paper from October.

That will be central to our thinking, and I look forward to us working a lot closer on this.

While that work is happening, we’ll be progressing some other immediate reforms as well.

Further government actions

First, I want to make sure our lead regulators are as coordinated as they can be.

Last Thursday, I wrote to the Council of Financial Regulators – which includes the RBA, APRA, ASIC, and Treasury –

Asking for their support for our broader agenda, including disclosure reforms, and tackling greenwashing in financial markets.

And we’ve also made climate and sustainable finance a priority for cooperation through the regular Treasurers’ meetings.

Second, we are starting to look at the role government green or sustainable bonds might be able to play in the future. 

Globally, sovereign green bonds are becoming more commonplace – to help develop sustainable finance markets and to fund green investments.

We won’t be following suit just for the sake of it – it’s got to work for Australia. But we’re happy to hear the arguments –

And Treasury will work with the Australian Office of Financial Management to consider the merits in more detail.

Finally, we are immediately stepping up our international engagement.

We’ve just joined the Coalition of Finance Ministers for Climate Action – for the first time – and I can confirm today that Treasury has joined the International Platform on Sustainable Finance as well.


Over the last few months, our unrelenting focus – understandably and necessarily – has been on the immediate and nearer‑term challenges in our energy market.

But that hasn’t stopped our broader, longer‑term work –

On energy investment, on risk disclosure, on sustainable finance and financial system stability.

We’re still thinking about all these things, still working on them every week –

Because the ‘tragedy of the horizon’ that Mark Carney spoke about is now coming clearer and closer into view.

And it’s not too late for us – we still get to choose, between tragedy and opportunity.

So let’s choose opportunity.

The opportunity to give our country and its people the affordable and reliable power they need and deserve –

And the new industries and jobs that can come with it.

The opportunity to safeguard our financial system against growing risks, and build a stronger, more resilient economy.

Because we can’t have a more resilient economy without cleaner, cheaper, more reliable energy.

And we won’t get that without more investment – investment that’s informed and aligned with our climate goals.

Recognising, as the global investment community increasingly does, that there is now a new harmony between profit and planet.

And responding by making our country a world leader in sustainable finance, taking a larger slice of the growing green investment pie.

I think if we can get the climate question right, we can get so much of the rest right.

That’s what I’ve got to say for today, but before I’m done –

I just want to acknowledge that everyone at the Institute – and really everyone in this room –

You’ve been talking about this stuff for years. And working away at it.

If there were times when you wondered if anyone in Canberra was listening… well, not everyone was listening. But enough of us were.

All the work you’ve done is so important to us. I want you to know how grateful we are for the foundation you’ve set, that we can now all build on together.

Thanks very much.