Introduction

 

Australia is another interesting case when it comes to implementing ESG values. Its variation is attributed predominantly to a federal system of government. The federal legislature can pass laws in all matters related to the country’s constitution. Furthermore, the states and territories are ruled by separate jurisdictions, which implement laws on more local bases. When it comes to the promotion of ESG values, those can be enforced by the Commonwealth, as well as different state and territory administrations. It is worth highlighting that Australia does not currently have a centralized source of ESG regulations, and most of them are dispersed around different ESG areas.

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Forming of ESG-related Regulations in Australia

 

Looking at the environmental legislation provides a solid example of how the country puts into practice the ESG values. The structure in Australia is much more similar to how the United States government executes ESG regulations rather than those in the rule of Singapore. The Commonwealth Government institutes a general set of rules. For instance, corporate identities in the whole country are obligated to report on greenhouse gas emissions, energy consumption, as well as social issues such as the risk of modern slavery among their supply chains. Besides, state and territorial governments can further carry out more concentrated laws.

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At the Commonwealth level, the government passed the Environment Protection and Biodiversity Conservation Act 1999, which aims for those aspects of the environment that are of national environmental significance. Therefore, for the most part, this set of objectives is 2 quite broad and unfocused. To give an example, the Act hopes to enhance the nation’s capacity to ensure the conservation of its biodiversity, establishes which places can become a part of the National Heritage List, and promotes a partnership approach to environmental protection. 

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To further facilitate the cooperation between the government and investors, those in the rule of Australia decided to implement the set of principles for social impact investing (Figure 1). The regulations include government as market enabler and developer, value for money, robust outcomes-based measurement and evaluation, fair sharing of risk and return, outcomes aligned with the Australian Government’s policy priorities, and co-design. The authorities hope to create an innovative mechanism to address social and environmental issues throughout the structure that unites both the public and private sectors through this initiative.

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On the other hand, the Environment Protection Act 2017 can serve as a representative case of legislation implemented statewide. The Act was put into action in the state of Victoria, and its main objectives include providing for the Environment Protection Authority Victoria (EPA) and setting out 11 principles of environmental protection. To put it more simply, the Act describes how the EPA should work with other private and public actors in order to minimalize the consequences of pollution and waste on human health and the natural environment. 

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Australia was one of the last developed nations to announce their plan of achieving net zero emissions. In October 2021, the Morrison government published Australia’s Long Term Emissions Reduction Plan and pledged to accomplish such goal by 2050. In addition, the environmental objective should be achieved with preserving Australian jobs and wellbeing of local industries. The agenda is supposed to operate based on five principles: technology not taxes; expand choices not mandates; drive down the cost of a range of new technologies; keep energy prices down with affordable and reliable power; and, be accountable for progress. The government pledged to invest $20 billions in low-emission technologies and unlock at least $80 billions of total private and public investment. It is the new technologies that are supposed to foster Australia’s advancements towards being a green state. According to the statistics, Australia is on the right path to reduce emissions by up to 35% by the end of 2030.

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The Role of Australian Investors

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Just like in many countries around the world, investors and stakeholders in Australia also contribute to a big push for the implementation of ESG values. Their actions are even 3 more prominent than in previously explored case studies. Even though broad-based ESG reporting in Australia is voluntary and only certain actors are obligated to report under ESG-related acts, the investment community has a strong incentive to promote ethical investment options and increase transparency. The COVID pandemic has significantly fueled the growth in solutions addressing ESG-related issues. However, some researchers say the origin of the movement started even before the outbreak and is mainly attributed to the popularization of the climate-change discourse in Australia. Investors are actively demanding climate-related disclosures, and many of the companies listed on the Australian Securities Exchange - ASX 200 index voluntarily answer their calls.

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Such turn of events shows the necessity for the government to act quicker and further facilitate the demands of the retail investors. However, the Australian government wishes to embrace this kind of voluntary attitude among corporate identities and not advise specific approaches or ban different types of investments. With the current attitudes of investors and the general public, such attitudes can bring a myriad of positive results.

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Conclusions

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The implementation of ESG values in Australia is undoubtedly headed in the right direction. The Commonwealth Government is aware of the need for regulations encouraging companies to function more transparently. The local level authorities also work hard to implement specific objectives that will improve the situation in their states. Notably, the collaboration between the private and public entities brings advantages for both sides.

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