Regulators around the global world are working to come up with frameworks to deal with the rising threat.
The European Union is leading the charge, having published its Taxonomy last year that defines investable assets that help low carbon transition as well as an extensive guide on how companies and financial institutions can use and disclose against the taxonomy.
Australia is working towards its own roadmap called the Australian Sustainable Finance Initiative but the framework will cover environmental and social issues, underpinned by the United Nation’s Sustainable Development Goals.
“The work [is] going on to inform what those recommendations look like and how it is that Australia has an ecosystem and financial ecosystem that allows us to withstand shock as a result of social dislocation and continuing climate issues into the future,” Tapley, who is chairing one of the working groups, said.
Australia needs to invest in key sectors such as technology and higher education as the government grapples with stimulating consumer demand while simultaneously weaning the economy off support programs. All while avoiding a second outbreak of the virus.
“In terms of effectiveness, in terms of driving standards of living, Reform [in Australia] really is the only way,” Yetsenga said. “And let's just focus on two sectors. One is tech and one is higher education. And in a way, they’re linked.”
Injecting more stimulus in Australia may not have the desired effect he said, pointing to the lack of confidence among Australian companies to borrow for new investment and high levels of household debt.
“It's hard to see how much you can actually stimulate,” Yetsenga said. “To the extent everybody invests in technology now and buys technology, it's actually a macroeconomic influence because it hits every sector of the economy. That's clearly been supercharged through this crisis.”
Sharon Klyne is Associate Director – Institutional Communications, ANZ
This story is based on comments made on a Carbon Market Institute’s virtual panel called Carbon Conversations.
Tapley and Yetsenga were joined by Gates Moss, AllianceBernstein’s Senior Research Analyst for Australian Equities, and hosted by John Connor, CEO, Carbon Market Institute. You can listen to the discussion HERE.