Australia grappling with climate change goals, NAB chair warns

Australia is at a ‘potential inflection point’ in terms of aspirations on climate change, NAB chair Phil Chronican warns.

ASIC is watching market participants who claim green credentials without delivering for investors.

National Australia Bank chair Phil Chronican has warned that corporate Australia is at a “potential inflection point” in terms of aspirations on climate change.

Speaking on the sidelines of a superannuation conference in Melbourne, Mr Chronican pointed to the uncertainties companies are grappling with in their climate goals and warned the pendulum could swing “too quickly” away from ambitions for fear of greenwashing accusations.

“Most large corporates have set out an aspiration to get their operations to net zero. They’re trying to find a path there. But there are a lot of uncertainties, sometimes technology isn’t there,” Mr Chronican told The Australian.

“And companies have been quite ambitious. They’ve put out ambitious goals. Because we’re now moving to a much tighter regime of compliance, we could swing the pendulum or change the balance too quickly, where companies start fearing (that they may) fall foul of their disclosure obligations or fall foul of greenwashing and may retreat from those ambitions.”

Mr Chronican said corporate Australia would be closely watching to see the action the Australian Securities & Investments Commission takes on greenwashing.

“If (ASIC) goes after the more egregious cases then nobody would worry about it, but I would be concerned if companies that had honest aspirations and were trying to move the dial in terms of the climate impacts were then being pinged with technical compliance issues.”

Mr Chronican added that NAB was closely assessing climate risks across its business.

“We’re at a potential inflection point. If you want a long-term sustainable business, you’ve got to think about the risks.

… we look at the climate risk in our lending book, both large emitters and those who would be vulnerable to climate effects and the home loan book, identifying those that are flood prone, cyclone prone areas. That’s been evolving over 5–6 years, and we learn as we go,” he said.

At the same conference, ASIC commissioner Simone Constant took aim at greenwashing in the investment space, reaffirming the regulator’s commitment to keeping a close watch on market participants who claim green credentials without delivering for investors.

“We all know Australia’s commitment (on climate) and it’s going to take innovation to get there. Greenwashing is an enforcement priority. But no one’s required to claim green credit or that they’ve got green status. They don’t have to make that claim,” Ms Constant said.

“Some products or investors do that for the right reasons, but … if an entity chooses to offer that (green) choice, it’s important that it does what they say it does,” she said.

“This is no different to the long history of misleading and deceptive conduct … Just do what you say you’re doing and if you’re going to make a claim, make sure you’ve got the evidence and data to back it up,” Ms Constant said.

Ms Constant, one of three new ASIC commissioners, confirmed her lead areas at the commission include superannuation, markets, corporate finance and cyber, with a particular focus on retirement outcomes within the super space.

On super, she said super fund trustees should focus on changing needs of members, “whether it’s a retail or for-member fund, but the changing needs of members as we're having an ageing participation”.

“Making sure you’re meeting the needs of members. We want to look at real points of need (within the industry) and as everyone works toward good retirement outcomes, what are good practices to meeting member needs. Working with the sector in that regard will be a focus for us.”

ASIC is keeping a close watch on companies who claim green credentials without delivering for investors.

Transparency drives better outcomes and confidence, whether it’s a consistency of expectations or stakeholders meeting those expectations, she told the conference.

Ms Constant last month called out super funds and financial advisers for leaving savers in underperforming choice super products.

“Australians trust their super funds and financial advisers to ensure they’re getting the best possible returns on their super savings. We expect funds and advisers to ensure that trust is not misplaced,” Ms Constant said following an ASIC review that found advisers were telling clients to stay in underperforming choice products rather than shifting them to better-performing options, including MySuper default funds.

“Members should be informed about their super investments – not left in the dark if their super investments are not performing as expected, and there may be better alternatives.”

The corporate watchdog said performance should be a “primary consideration” for superannuation fund advisers, adding that it was considering “a range of regulatory responses” to its review.

“As more Australians approach the drawdown on their hard-earned retirement savings, it’s critical the super and financial advice industries make sure they do everything possible to promote informed and confident investment decision-making by members,” Ms Constant said.

“ASIC, along with APRA, wants to see industry focus on ensuring fund members are achieving good investment outcomes that ultimately support stronger outcomes in retirement.”