Australia’s ESG movement builds momentum 

September 15, 2022

Australia’s new-found commitment to ESG investment is gathering momentum, with both the Principles for Responsible Investment (PRI) and Climate Action 100+ updating their guidance for the nation. 

Traditionally regarded as an ESG laggard, due to its powerful mineral and mining industry, Australia voted in a new Prime Minister earlier this year. 

Anthony Albanese, of the Australian Labor Party, has made fighting climate change a key part of his political agenda and has since set a net-zero target of 2050 for the country.  

Now, ESG activists are turning greater attention to Australia. 

Climate Action 100+ has updated its guidance ahead of AGM season, with new priorities identified for activist investors holding stakes in Australian companies.  

This has taken the form of updates to its Net Zero Company Benchmark assessments with 14 Australian companies on its focus list.  

These have been released early ahead of the upcoming proxy season in Australia.  

Read more about Australia's 2021 Proxy season:

https://www.old.manifest.co.uk/downloads/minerva-briefing-2021-australia-agm-season-review/

As such, scores have been published for major names such as BHP Group, AGL Energy, and Origin Energy. Each company has been scored on various areas of its climate change commitment.  

For example, BHP Group has scored positively – or ‘green’ – across its net-zero ambitions, where statements have been made. 

Conversely, it has scored negatively – or ‘red - across the board in terms of ongoing capital reallocation to actually meet these ambitions.  

The group is arming investors with this data to help them vote through climate change reforms in Australia. 

At the same time, the PRI has highlighted a lack of clarity, guidance, and tools for Australian policymakers and regulators when it comes to influencing sustainability outcomes. 

The PRI is therefore proposing reform across five areas: 

1. Update standards and guidance to clarify investors’ duties regarding sustainability. 

2. Adopt a comprehensive corporate sustainability reporting framework. 

3. Strengthen regulatory support for effective stewardship. 

4. Implement an Australian sustainable finance taxonomy. 

5. Address the effects of product heatmaps and financial performance tests on investors’ actions on sustainability outcomes.  

In addition, the PRI is also calling for further research on how beneficiaries’ sustainability preferences – in Australia – can be considered, and how these can be treated in investment management agreements.