Financial markets depend on a sustainable economy. Environment, Social and Governance (ESG) considerations are now at the core of any strategy about how capital investment is made with the objective of making a sustainable society.
AFMA pursues a range of activities which contribute to sustainability in practical ways. AFMA goes beyond talking about sustainability and is actively working on the myriad of technical issues that need to be addressed, elaborated and agreed upon to support financial market activity.
At the forefront is AFMA’s is commitment to working with its members to meet the Australian Government’s objectives of achieving Australian economy-wide emissions reduction targets of:
- reducing net Green House Gas emissions to 43% below 2005 levels by 2030; and
- reducing net Green House Gas emissions to zero by 2050.
Economy-wide reduction of emissions relies on action by the private sector driven by market forces. While government policy is providing impetus, the biggest push for decarbonisation is coming from investors and consumers alike, who are desirous of the transition.
Carbon markets are a critical part of facilitating the transition especially for the Energy sector. AFMA is active is providing documentation and standards for the functioning of the Carbon Market.
Investing in the energy transition often means investing in new infrastructure. Capital raising is central to funding the transition. AFMA is active in supporting the work of debt capital market members around the principles that give confidence to investors in the credentials on ESG related bonds and other securities.
AFMA works on existing and upcoming market practices and supporting coherent market standards for all participants and stakeholders. Without such work, sustainable finance ambitions cannot be materialised.
AFMA is committed to the work on the International Sustainability Standards Board. Globally harmonised government backed disclosure standards are an essential central pillar for inspiring confidence in investors. Data collection infrastructure is the fundamental building block on which disclosure and targets rely.
The easy part of the task is setting the disclosure standards, the hard work lies in making them a reality. AFMA members are committed to the task on the basis that implementation recognises how long and hard the road will be; and realistic compliance expectations that take account of these realities, are set.
There is still much to be done to build up the quality of data collection. AFMA is working with members and regulators to identify the data that will enable reporting. The settlement of consistent disclosure standards is essential for defining what data and systems need to be put in place, which is work we continue to advance.