The Australian Sustainable Finance Institute (ASFI) is developing an Australian taxonomy following the development of sustainable finance taxonomies in the European Union, ASEAN, and other important markets. The taxonomy solidifies the Federal Government’s mission to drive a net-zero transition domestically and internationally through various regulatory tools.
The taxonomy is complex, evolving, and subject to continuous review. It has been designed to raise investment in sustainable economic activities that meet climate change mitigation objectives. However, stakeholders in the mining industry can now shape the kinds of minerals, operations, and benchmarks that will be categorized within the taxonomy and contribute to a practical framework.
Sustainable finance taxonomies are evidence-based frameworks that offer direction to market participants on identifying projects, assets, and activities that are low-carbon, aligned with low-carbon economic growth, or are environmentally resilient. They aim to channel investments towards the most critical initiatives for achieving net-zero emissions and environmental stewardship.
Taxonomies can facilitate the alignment of investments with national environmental policies and sustainable development strategies and are increasingly employed as a governmental instrument to support compliance with the Paris Agreement’s objective of limiting global warming to well below two °C above pre-industrial levels by 2100.
Globally, about 40 sustainable finance taxonomies are either in place or under development, and they aim to implement multiple climate, environmental, and social objectives. At this point, however, most focus on achieving climate change objectives as a priority. Corporations and financial institutions can use taxonomies as frameworks for reporting, setting disclosure obligations, and ‘labeling’ financial products. Taxonomies can also serve as a framework for establishing criteria for developing and executing energy transition plans that align with net zero goals.
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