The Australian Sustainable Finance Institute (ASFI) released the long-awaited taxonomy on Tuesday, positioning it as a foundational tool to help investors, banks and businesses channel capital into credible, science-aligned projects that support the nation’s net zero goals.
Described as a voluntary, Paris-aligned framework, the taxonomy provides detailed criteria for assessing green and transition activities across key sectors – from energy and transport to minerals and manufacturing.
It also includes a world-first focus on sectors central to the Australian economy, such as mining and critical minerals, alongside expectations for engagement with First Nations communities.
ASFI CEO Kristy Graham said the taxonomy’s release marks “a transformative moment” in the evolution of Australia’s sustainable finance market.
“The 20-month development process has been rigorous and collaborative, led by an independent expert decision-making body with strategic oversight from the Australian Treasury and financial regulators. It reflects deep technical input and extensive engagement across finance, industry and civil society,” Graham said.
“To unlock global finance for Australia’s key green and transition sectors, the taxonomy had to be internationally credible and locally relevant … ASFI will now work with Australia’s leading financial institutions to pilot the taxonomy in real-world investment decisions.”
Dr Guy Debelle, former RBA deputy governor and co-chair of the technical body behind the taxonomy, said it delivers a “science-aligned guide” for directing capital efficiently.
“The taxonomy’s release is the foundation for a credible and resilient sustainable finance market in Australia,” Debelle said.
A pilot program to test the taxonomy’s real-world use is now underway with participation from ANZ, Westpac, CBA, NAB, the CEFC, HESTA, Rest and others.
The Climate Bonds Initiative has also confirmed it will integrate relevant criteria into its global certification scheme, boosting international interoperability.
“Australia’s sustainable finance taxonomy is a shopping list of investments for the future. Climate Bonds Certification will now be able to confirm adherence to both the Australian and the Climate Bonds Taxonomies. This will support investor confidence in the credentials of sustainable financial investments,” said Sean Kidney, CEO and co-founder of Climate Bonds Initiative.
Speaking on behalf of HESTA, Kim Farrant, general manager responsible investment, said: “We believe the Australian sustainable finance taxonomy is a practical, credible and effective tool that can help facilitate greater long-term investment in Australia’s transition to a low-carbon future.
“HESTA supported its development and we look forward to further opportunities from this work that can help us deliver strong, long-term returns to our members.”
Similarly, Rest’s general manager of responsible investment and sustainability, Leilani Weier, said: “An Australian sustainable finance taxonomy should become one of a number of tools that investors use to support the classification of assets in our investment portfolios.
“With 2 million members and 1 million under 30, many of Rest’s members are decades from retirement. The taxonomy is one lever that we can use over time to help us and our members understand the sustainable finance assets in our portfolio.”
