Sustainable Financing: Roadmap to Decarbonisation & Achieving the SDGs
The UNAAWA held an SDG forum at KPMG on the 8 November 2022. The topic of the forum was “Sustainable Financing: Roadmap to Decarbonisation & Achieving the SDGs” which highlighted the importance of sustainable finance and the role it plays in achieving our state’s ambition of decarbonisation and the UN SDGs.
Sustainable finance means that an investment decision takes into account the environmental, social and governance (ESG) factors of an economic activity or project.
Dr. Sandy Chong – Chair of SDG Forum welcomed guests of the forum and set the tone of the evening’s topic by highlighting that with $3 trillion of funding needed every year, sustainable finance is a key enabler to achieve net zero by 2050 and the SDGs. The introduction was followed by an open address by Trevor Heart – WA Chairman of KPMG, stating that Western Australia has the capability to play a major role in the global goal of achieving net zero by 2050 by leveraging its natural advantages, innovative technologies and stable geopolitical landscape.
Per the forum’s tradition, guests were invited to participate in the Kahoot! Game and quizzed to test their SDG related topics knowledge, with Ian – crowned the winner of the night.
The panel hosted four guests comprising of Tanya Kerkvliet – Director of KPMG ESG, Climate Change and Sustainability, Caroline Chan – Non-Executive Director of Stanmore Resources Ltd and former Head of Westpac, Richard McKenzie – Head of Strategy at Western Australian Treasury Corporation (WATC), and Jennifer Kirk – Director at Department of Jobs, Tourism, Science & Innovation (JTSI).
Sustainable finance trends
Tanya introduced the topic and explained how sustainable finance is becoming a commercial imperative which is being demonstrated by current trends in the finance market whereby ESG funds are performing better than the general market; sustainable debt has grown by over 500% in the last 5 years; and new sustainable financing products being offered have increased rapidly in a short time span.
Risk & Opportunities
Historically, the focus for businesses was purely on profit regardless of negative environmental and social impacts. Caroline talked about how sustainable finance is shifting businesses’ mindsets of taking into consideration ESG factors to achieve specific targets - or face the risk of being penalised. Tanya added that seeking financing may also become harder if entities are facing potential risks and do not have mitigation plans in place resulting in investors’ unwillingness to provide funding.
Whilst not considering ESG in investment decisions presents risks, it sets those apart that are. Companies that are undertaking sustainable projects, signal to the market a credible plan to achieve decarbonisation and as Jennifer pointed out, having strong ESG credentials is a competitive edge and key factor in investors’ decision making.
The role of the Government
As the market is expanding, higher level of regulation and reporting requirements are being developed to monitor companies which aid in driving discipline and meaningful change but also exposing companies that are not doing the right thing. Richard discussed how important it is for companies to act genuinely or risk being caught out – this was recently demonstrated with ASIC issuing its first greenwashing fine in October 2022. The importance of providing flexibility to businesses was also pointed out as being important. Rather than over-regulating and merely seeking companies to comply, allowing the market to lead changes through developing innovative and effective strategies of their own would bring greater benefits overall. Jennifer mentioned that one of the Government’s roles is to support industries to decarbonise with investment in new technologies and ensuring small businesses are not left behind.
Overall, the panel shared the view that the sustainable finance trend is not slowing down and is certainly not a fad, especially in Australia where the market is yet to reach similar maturity as compared to the European market. Sustainable finance is viewed as a key enabler to the global goal of achieving net zero and the SDGs by driving positive changes and good behaviour. Tanya confirmed this point by explaining that sustainable projects that were considered poor business cases ten years ago are now being brought back to life when reviewed through an ESG lense.
The event was attended by 80 guests including UNAAWA members, community partners, broad range of industries professionals and concluded with light snacks and drinks.