The US$250 trillion ($370 trillion) energy transition to decarbonise the global economy is throwing up untold investment opportunities, yet the management of the human toll from this momentous shift is only slowly gaining political and investor attention.
Attendees at this year’s annual ACSI conference will hear from experts on the crucial importance of managing communities affected by the decarbonisation of the global economy. In Australia, the Albanese Labor government has recognised the difficulties faced by disaffected workers and communications and is undertaking work to provide support.
“We’re pleased to see that the government is doing some thinking about supporting the transition, particularly in regional locations in Australia which are going to bear a much bigger burden through the transition,” ACSI chief executive Louise Davidson tells Investment Magazine.
“Those communities and workforces need to be supported in getting through it. From an investor perspective, a just transition is key because a great deal of investment risk is attached to an unjust one.”
The UK and Spain have set good precedents on transition work according to Davidson. ACSI is proposing government set up a just transition framework to provide guidance and standards for affected stakeholders, as well as Just Transition Agencies to provide clear strategies to support works as well as economic development.
The International Sustainability Standards Board (ISSB) – the global agency tasked with establishing global reporting standards on sustainability – is kicking off a consultation on human capital and human rights in May in recognition of this key risk.
Mandating TCFD reporting
The government is also moving ahead with mandatory reporting under the Taskforce on Climate-related Financial Disclosures (TCFD) framework from 2024. The requirement will be implemented in phases, with the first reports required for FY2025.
“The upcoming mandation of the TCFD will be significant for our sector, from the perspective of increasing publicly-listed company disclosure and transparency,” Davidson says.
“It will also have implications for the super fund sector itself. A large number of super funds already do some TCFD reporting, but that will obviously become broader in the future.”
Treasury is also making progress on a sustainable finance framework and has organised a closed-door roundtable discussion in Canberra at the end of the month.
The ISSB will adopt the TCFD as part of their recommendation on climate reporting which will significantly improve transparency and accountability for investors and communities alike.
This means investors will not struggle to compare what a particular investee company is representing in Spain with a company in North America where the two might be using completely different frameworks and standards, she explains.
“This will be very useful, as it’s been quite confusing for companies to decide which framework to use” says Davidson. “It will also provide a global standard which will be very helpful from an investor perspective.”
‘In members’ best interest’
The Labor government is also moving ahead with a long-awaited referendum to constitutionally recognise the role of First Nations Australians, giving them a Voice to Parliament. The issue has garnered contentious debate along partisan lines in Australia.
Conference delegates will hear from renowned academic and indigenous advocate Professor Marcia Langton, associate provost at Melbourne University discuss how this reform will inform policy and legal decisions affecting the lives of First Nations Peoples.
The investment case to support the Voice is clear, says Davidson, in “at least starting to settle our proper recognition of Indigenous peoples”.
“That is good for business in Australia, and therefore we think that there is a good investment case for it and in members’ best interest.”