Australia is experiencing unprecedented bushfires across multiple states, and there are still two months of the Summer season left. Whilst many organisations have been helping victims and volunteers with donations, the economic and environmental impact is far-reaching.
The economic cost of the fires to the Australian economy has already topped $2 billion, and these fires show no sign of slowing down. Sadly, it’s likely this figure will continue to rise. This estimated cost has been calculated using elements already measured by the government, including income from tourism, retail and agriculture.
However, as Michael Pascoe points out, we seem to be forgetting the wider cost of these fires. “The half-billion animals reportedly killed and the many millions of trees – what were they worth?” Pascoe continues, “Clean water, clean air, sustainable ecosystems – all have massive value, obvious value to most people, but do we price them in our budgeting?”
The simple answer from a governmental perspective is no. As it stands, current accounting methods and standards cannot capture environmental impact. However not all is lost, as organisations lead the charge to reduce greenhouse gas emissions and promote sustainable finance.
In fact, there is a banking initiative in the Australian financial industry that is working to align our finance sector, and follow in the footsteps of the EU’s High Level Expert Group on Sustainable Finance and the UK’s Green Finance Taskforce.
Introducing the Australian Sustainable Finance Initiative (ASFI)
Born from industry discussions at a United Nations Environment Programme Finance Initiative (UNEP FI) event in 2018, the Australian Sustainable Finance Initiative (ASFI) is the first of its kind in Australia.
The ASFI released its first progress report on the 11th December 2019, and has confirmed in this report that it will next produce an interim report, which will form the basis for the Sustainable Finance Roadmap, to be delivered in 2020.
This roadmap is to ensure the financial industry supports greater social, environmental and economic outcomes in Australia. It’s to allow the sector to transition to a more sustainable economy, consistent with global goals including the Paris Agreement on climate change, and the UN Sustainable Development Goals.
Since launch, the initiative has received financial support from Bank Australia, Australian Ethical Investment, Cbus, Insurance Australia Group, QBE Insurance Group, National Australia Bank, ANZ, Commonwealth Bank of Australia and Westpac Banking Corporation.
The ASFI has adopted a collaborative process that is overseen by a Steering Committee of both members and observers. This committee consists of senior financial services, academic and civil society representatives.
Members include the likes of Emma Herd, Investor Group on Climate Change CEO; Sarah Barker, Head of Climate Risk at Minter Ellison; and Dr John Hewson AM, the Chairman at the Business Council for Sustainable Development Australia. Observers feature Eric Usher, Head of the UN Environment Program Finance Initiative; Geoff Summerhayes, Executive Board Member of Australian Prudential Regulation Authority (APRA), and Executive Leaders from the Australian Securities and Investments Commission (ASIC).
What is sustainable finance?
The term sustainable means “able to continue over a period of time.” Sustainable finance is about ensuring the financial sector survives the impact of climate change.
The ASFI states that “the health, sustainability and stability of our economy is inextricably linked with the health, sustainability and stability of our people, society and the natural systems on which we all depend.”
By actively realigning the systems that underpin the Australian economy to support the natural ecosystem, the ASFI and other organisations can ensure Australia continues to prosper in the 21st century and the centuries that follow.
Banks start to refuse fossil fuels
Sweden's Central Bank (Riksbank) made headlines late last year when it decided to take action against countries with high Greenhouse Gas (GHG) Emissions.
Australia was one of these countries, and Riksbank sold the bonds it owned from Western Australia and Queensland. It also took a stand against Canada, selling the bonds it owned in the oil-rich province of Alberta.
Goldman Sachs followed suit, not by selling bonds, but by developing and sharing a new environmental policy. A policy that accepted climate change as a scientific fact, and outlined that it would no longer finance new drilling for oil in the Arctic.
Responsible banking in Australia
If you’re looking to reduce your financial carbon footprint, there are many lenders going green in support of eco conscious spending.
Green personal loans are also becoming popular as they help Australians update their homes with solar panels, energy efficient hot water systems or other renewable energy products to reduce GHG emissions.
However, one of the best ways to reduce your carbon footprint is by supporting banks that do not invest in the fossil fuel industry.
Bank Australia, for example, refuses to invest in fossil fuels, intensive animal farming, live exports, gambling, arms or tobacco companies. It also has a Responsible Banking Policy, published online, and the bank is focused on using money customers deposit to support people, community organisations and businesses.