The Australian government has made a significant announcement regarding its commitment to environmental sustainability. Treasurer Jim Chalmers has revealed that the government will issue its first-ever green bond next year to raise funds for initiatives to achieve the country’s net-zero goals. This move marks Australia’s entry into the sustainable finance market, joining the growing number of sovereign debt issuers raising capital to support sustainable projects.
The announcement was made at the second Investor Roundtable hosted by the Albanese Government, which brought together investors representing over $2 trillion in assets. The roundtable explored investment opportunities to support Australia’s net-zero goals, develop a sustainable finance market, and finance consumer energy performance upgrades.
According to a statement by Chalmers, Minister for Climate Change and Energy Chris Bowen, and Assistant Minister for Climate Change and Energy Jenny McAllister following the roundtable, the green bond program will enable investors to back public net-zero focused projects, attract more green capital to Australia, and help boost the scale and credibility of the country’s green finance market. The program is expected to commence in mid-2024, following the development of a Green Bond Framework.
In addition to the green bond initiative, the government has made several commitments to advance the development of a sustainable finance market. One of these commitments is to co-fund developing a sustainable finance taxonomy with the Australian Sustainable Finance Institute. This will help define activities and assets as sustainable for labelling green financial products.
Furthermore, the government has pledged over $4 million in funding to expand ASIC’s surveillance and enforcement functions to crack down on greenwashing. ASIC has warned investment fund and financial product providers that it is keeping an eye on misleading sustainability claims. In February 2023, ASIC launched its first greenwashing-related court action against Marsh McLennan company Mercer Superannuation.
It’s worth noting that the Australian government set its climate goals into law last year, including its targets to reduce greenhouse gas emissions by 43% by 2030, compared to 2005 levels, and to achieve net zero by 2050. The upcoming green bond program and the other commitments made by the government highlight its dedication to achieving these targets and creating a more sustainable future for Australia.