The Federal Treasurer’s essay in The Monthly shows the emphasis this administration will place on climate-positive initiatives, with a focus on public-private partnerships.
Although there’s no direct link to ARU’s activities, providing a framework for ESG investment and encouraging co-investment in climate-led initiatives will, ultimately, benefit our project.
Here’s an excerpt:
“Collaboration is just as important as co-investment. The private sector is key and central to sustainable growth, and there’s a genuine appetite among so many forward-looking businesspeople and investors for something more aligned with their values, and our national goals.
I’ve seen this for myself in the course of my work, and especially in the Investor Roundtable I’ve been convening as treasurer, representing trillions of dollars of capital and focused on housing, energy, data and digital, and more.Our success also depends on market design and disclosure to ensure our private markets create public value.
The clean energy sector is a perfect example of how greater levels of private investment are achieved when the government ensures the flow of first-class information.
Businesses want to manage climate risk, but investors don’t have a consistent framework to compare how businesses are doing this. Investors should be able to work out the climate-risk rating of a firm just as a lender can work out a credit-risk rating.So in 2023, we will create a new sustainable finance architecture, including a new taxonomy to label the climate impact of different investments.
That will help investors align their choices with climate targets, help businesses who want to support the transition get finance more easily, and ensure regulators can stamp out greenwashing. This strategy begins with climate finance, but over time I see it expanding to incorporate nature-related risks and biodiversity goals.
We will try to expand the role for impact investing too. Across the social purpose economy, in areas such as aged care, education and disability, effective organisations with high-quality talent can offer decent returns and demonstrate a social dividend – but they find it hard to grow because they find it hard to get investors. Right now, the market framework that would enable that investment in effect doesn’t properly exist.It’s no accident that these strategies typically involve an element of partnership.
This is partly a reality of our fiscal position – the federal budget is deep in debt and under pressure – so the options for large, broad new programs are limited. But it’s also a purposeful choice – we want to change the dynamics of politics, towards a system where Australians and businesses are clear and active participants in shaping a better society.
This year, our institutions can draw on all the nation’s talents. Governments and investors can be partners, not protagonists. Our local communities can gain choice and control over their own futures. And the same regulatory frameworks that ensure that for-profit capital in the private sector creates value for investors can generate public value in the for-purpose economy.
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