What is Sustainable Finance?
Sustainable finance refers to any form of financial service that goes beyond ‘business as usual’ by integrating ESG (environmental, social and governance) criteria into the business or investment decisions for the lasting benefit of clients, stakeholders and society at large.
At ISF, we work with financial institutions such as banks, insurance, superfunds and institutional investors as well as regulatory bodies and the community to better implement the principles of sustainability into the financial sector. In doing so we hope the economy will start working for people and the planet rather than the other way around.
Report: Water Scarcity Risk for Australian Farms and the Implications for the Financial Sector
Water scarcity is a persistent and growing issue for farms across Australia. Access to affordable water is necessary for farms to remain competitive in an increasingly globalised food and commodity market. Recent droughts have heavily reduced dryland farming production and the overall volume of water that can be allocated to irrigation. The future impacts of climate change will also increasingly contribute and exacerbate the effects of water scarcity.
Water scarcity represents a material risk factor for farms across Australia with the potential for a reduction in yields and increasing the costs of farm production. At present, the materiality of water risk is not fully incorporated into the assessment of farm loan applications. Introducing water risk assessment processes into farm loan applications has the potential to reduce financial risks for farms.
This research, a partnership between the Institute for Sustainable Futures (ISF), The Yield and National Australia Bank, develops a new method to calculate the water risk exposure for a farm.
Report: Unlocking Australia’s Sustainable Finance Potential
Global financial markets are gaining momentum on developing financial systems aligned to deliver climate and sustainability objectives. Many countries have committed to, or are already in the process of creating and coordinating the implementation of road maps and action plans for a sustainable financial system.
Developing new green infrastructure presents an estimated $100 trillion investment opportunity over the next 15 years to meet the Paris Agreement on Climate Change, and to mitigate risks posed to extant portfolios. The Paris agreement requires nations to take action to limit their greenhouse-gas emissions and prevent global temperatures from rising 2 degrees Celsius above pre-industrial levels. The European Union (EU) sought first mover advantage to obtain these goals by requesting advice from a High Level Expert Group (HLEG), comprised of 20 industry experts. The HLEG considered how to enable coordinated action, mechanisms to steer capital towards sustainable investments and protect the financial system from environmental risks. The HLEG released its final report in January 2018 and its recommendations now form the basis of the EU’s Action Plan on Sustainable Finance adopted by the European Commission (EC) in March 2018.
This report reviews the EU Action Plan, comparing each of its ten action points to the current state of play in Australia.
Report: Supercharging Australia’s clean energy transition.
The transition to a 100 percent renewable energy future by 2050 in Australia presents a clear and increasingly low-cost pathway for Australia to meet its Paris commitments, particularly when compared to the decarbonisation challenges in other sectors of the Australian economy.
In particular, with an allocation of 7.7 percent from superannuation, the power sector could reach 100 percent renewable penetration as soon as 2030.
Report: Investing in savings: Finance and cooperative approaches to electricity demand management
This scoping study examines the potential for the Clean Energy Finance Corporation to help reduce customer electricity bills and foster clean energy investment in Australia by supporting electricity network businesses to implement Demand Management (DM).
The report concludes that the benefits of network DM are likely to be significantly greater and realised more quickly if regulatory reform is complemented with a cooperative approach to performance targets, reporting and incentives.
Get in touch
Contact Dr Scott Kelly for more information or if you'd like to collaborate on a sustainable finance initiative.