October 1, 2022

Sustainable Finance investor and market news: October 2022

A look at what's been happening in the sustainable finance market in Australia and abroad.

Investor and market news

ICMA publishes 2022 guidance updates

Climate Bonds publishes Social and Sustainability Bond Database

LMA publishes introduction to sustainability coordinator role

LMA publishes a series on protecting the integrity of sustainability linked loans

ISSB receives global response on proposed sustainability disclosure standards

AASB and AUASB publish their submission to the ISSB’s propose sustainability disclosure standards

NSW Government releases interactive Net Zero Emissions Dashboard

US Senate passes climate bill to unlock US$370bn for climate action

  • The United State (US) Senate passed the Inflation Reduction Act of 2022, unlocking US$370bn to fund climate and energy-focused investments and incentives.
  • Climate and energy-focused aspects of the bill will include measures in lowering cost of renewable energy for consumers, promote development of domestic clean energy manufacturing capacity, support climate solutions to decarbonise industry, and invest in climate resilience and mitigation initiatives in disadvantaged communities.

RIAA release Responsible Investment Benchmark Report

  • The Responsible Investment Association Australasia (RIAA) released the 2022 Responsible Investment Benchmark Report.
  • This report found that responsible investment usually deliver substantial positive financial returns and attributes this to more careful investment selection and more robust risk management practices.

Regulatory developments

Albanese Government passes Climate Change Bill 2022

  • The Australian parliament has passed the Climate Change Bill 2022.
  • The bill outlines Australia’s emissions reduction target of 43% from 2005 levels by 2030 and for net zero emissions by 2050. It will also establish a formal review process from the Climate Change Authority.

NZ Government passes mandatory climate-related disclosures

  • The New Zealand (NZ) Government passed a legislation to make climate-related disclosures mandatory for large publicly listed companies, insurers, banks, non-bank deposit takers and investment managers.
    • The goal of mandatory climate-related disclosures is to ensure that climate change and its effects are regularly considered business activities, help climate reporting entities better demonstrate responsibility, and lead to more efficient allocation of capital to help smooth the transition to a sustainable economy.

Energy efficiency and accessibility standards increase for new homes

  • Australian federal, state and territory building ministers have agreed on a series of national reforms to ensure that new homes in Australia will be liveable, accessible and energy efficient.
  • Changes will be made to the National Construction Code to include liveable housing provisions, new residentials efficiency standards and condensation mitigation measures.
  • The new national minimum residential energy-efficiency standards mean that new houses and apartments will need to meet a seven-star rating, up from the previous six stars.

APRA publishes findings of latest climate risk self-assessment survey

  • The Australian Prudential Regulation Authority (APRA) has published findings from its latest climate risk self-assessment survey conducted across banking, insurance and superannuation industries.
  • The voluntary survey was designed to provide insights into how APRA-regulated entities are generally aligned to APRA’s guidance set out in Prudential Practice Guide CPG 229 Climate Change Financial Risks.
  • The responses to the survey from 64 medium to large institutions, suggest APRA-regulated entities are generally aligning well to APRA’s guidance, especially in the areas of governance and disclosure. Responses indicate that only a small portion of APRA-regulated entities embed climate risk across their risk management framework.

EU approves inclusion of nuclear and natural gas in its green taxonomy

  • The European Parliament did not object to the Commission’s Taxonomy Delegated Act to include specific nuclear and gas energy in its taxonomy of sustainable sources of energy under certain circumstances.
  • Under the green taxonomy, Natural gas will have to be below certain emissions thresholds and may only be approved to 2030 or 2035 to be labelled as green. New nuclear plants using advanced technologies to extend the life of existing plans may be approved to 2040 or 2050.

Britain’s Financial Conduct Authority calls on outside experts to combat greenwashing

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