Last week, Melbourne hosted the Responsible Investment Australia 2023 conference, the foremost event for sustainable business and responsible investment in the southern hemisphere.
I appreciated the opportunity to go as one of three delegates sponsored to attend by the Gottstein Trust, the two other industry colleagues were Sara Gipton from PF Olsen who also chairs the Australian Forest Products Association Climate Policy subcommittee and Gottstein Trustee Nils Gunnersen.
The conference delved into a range of issues under the environmental, social, and governance (ESG) umbrella. Understanding ESG is vital; these factors reflect a company’s environmental impact, stakeholder relationships, and ethical conduct. ESG criteria enable companies to showcase not just their financial success, but their commitment to long-term sustainability and positive social influence.
A key emphasis of the conference was the importance of transparency, renewables, and certification in sustainable finance. Asset owners and managers are encouraged to create solid systems for regular stakeholder engagement, setting clear targets, and monitoring progress. This commitment underpins the importance of accountability in achieving sustainability goals.
Renewable energy and tech-driven solutions took centre stage, highlighting lithium’s critical role in technological advancement and artificial intelligence. The crucial value of biodiversity in sustainability discussions was also underscored. However, the conference overlooked important sustainability concepts like ‘natural capital’ and ‘nature-based solutions’, key topics that need further exploration and understanding.
Productive forests were underrepresented in ESG investment discussions
The forestry sector, despite its significant contribution to sustainability, found itself underrepresented in the discussions. This shows the need for the industry to communicate its role in the sustainability transition more effectively. The industry needs to better articulate the benefits of carbon sequestration and the production of carbon-dense products.
Instead of using the term ‘offsets’ the conference instead suggesting ‘drawing down’ carbon, highlighting a shift towards ‘impact investing’ over ‘sustainable’ funds.
With an expected increase in regulatory scrutiny, entities making ‘net zero’ plans, like investors and superfunds, should brace for increased oversight from regulatory bodies, such as the Australian Competition and Consumer Commission (ACCC). The timber industry must focus on transparency and align its practices with international standards to show progress against set targets.
One anticipated development is Australia’s ‘Sustainable Finance Taxonomy’, expected to mirror its EU counterpart, which highlights the trend of adopting voluntary standards to meet threshold standards for investors.
Could this provide an opportunity for forestry to utilise it’s existing third-party certification and standards frameworks?
The concept of ‘patient investing’, which involves long-term investments aligned with the Paris Agreement, was also discussed. This offers an opportunity for the forestry sector, provided it can effectively frame its role within the broader ESG narrative.
In summary, the RI Australia 2023 conference highlighted the changing landscape of sustainable finance. The forestry industry, despite limited representation, emerged with a clear understanding of its role and the tools needed to participate actively in this transition. The event served as a reminder that sustainability is a collective effort, and the forestry sector has a unique and important role to play.