PRI, ACSI and ASFI call for focus on social factors in sustainability guidance

August 16th, 2024

Investor groups have urged the Australian Competition and Consumer Commission (ACCC) to include social factors in its draft guide to sustainability collaborations.

The draft guidance outlined that the ACCC is open to authorising competition law exemptions for financial institutions to collaborate on sustainability-based initiatives in cases where the benefits would outweigh the detriment of diminished competition.

ACCC Acting Chair Mick Keogh said: “When businesses work together [to achieve better environmental outcomes] they sometimes risk breaching competition law, but legal protection via an ACCC authorisation may be available so that they can pursue their goals without that risk.”

The draft, which opened to consultation in July, received comments from the Principles for Responsible Investment (PRI), Australian Council of Superannuation Investors (ACSI) and the Australian Sustainable Finance Institute (ASFI).

While all three groups welcomed the guidance, each one also urged the ACCC to clarify the definition of sustainability in the guidance and called for it to include social factors in addition to environmental.

The draft defines sustainability collaboration as “discussions, agreements or other practices amongst businesses which are aimed at preventing, reducing or mitigating the adverse impact that economic activities have on the environment”.

While the draft acknowledged that “this guidance focuses specifically on environmental sustainability, the principles discussed may also apply to other types of collaboration agreements including those related to other forms of sustainability objectives”, the groups all urged for further clarity on this and for it to explicitly mention social factors.

ASFI noted that “without this clarity, the guide is likely to be interpreted as applying only to environment-related collaborations and this may deter legitimate collaborations on other issues”.

The finalised guide is set to be published in Q4 2024.

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