Financial institutions in favour of expanding sustainable framework

Several top Australian financial institutions have signalled their favour in expanding the Australian Sustainable Finance Taxonomy to better support the allocation of capital towards sustainability goals and for protecting from climate risks.

According to the first report from the Australian Sustainable Finance Institute’s (ASFI’s) pilot testing of its sustainable finance taxonomy in practice, titled Unlocking Private Capital for the Transition: Market insights from the practical application of the Australian Sustainable Finance Taxonomy, 80 per cent of the financial institutions surveyed supported expanding the taxonomy to climate adaptation and resilience.

Approximately 80 per cent were also in favour of implementing a a shared public-private governance model, saying this element would be crucial to ensure credibility and usability among investors.

The institutions involved in ASFI’s testing include ANZ, Commonwealth Bank, Clean Energy Finance Corporation, HESTA, Metrics Credit Partners, Moody’s Ratings, NAB, Rabobank, Rest and Westpac.

The report also indicated that Australia’s green bond market needs a boost in order to viably integrated “taxonomy alignment across mainstream lending and investment”, given it accounts for only five per cent of total bond issuance according to a 2025 Westpac IQ report.

“Australia’s sustainable finance market is growing fast, but it’s still only a fraction of where it needs to be,” ASFI Chief Executive Officer, Kristy Graham, said.

“Expanding the taxonomy is about unlocking the mainstream and helping direct global capital, not just green bonds, toward the transition.

“The taxonomy is already helping Australia define what good looks like. Now it’s about ensuring access to deeper, more competitive funding for the transition.

“These findings show we have the opportunity, and the market demand, to build on that success and ensure capital is directed toward genuine, high-impact transition activity.”

The ASFI report also made three recommendations to the Government in order to successfully implement the program’s insights into real applications, including:

1. Expand the Australian Taxonomy to adaptation and resilience as an immediate priority;
2. Step-up international engagement to shape emerging international standards in Australia’s interests, particularly for key sectors such as mining and agriculture; and
3. Establish enduring taxonomy governance arrangements that enable ongoing publicprivate cooperation for taxonomy implementation, expansion, and international engagement.