Australia Introduces New Green Classification System in Collaboration with Major Banks

In a significant development, the International Center for Sustainable and Just Transformation at Witten/Herdecke University and the Institute for Ecological Economic Research have released a policy report titled "Financing the Green Transition". The partnership aims to define clear guidelines for green assets, encouraging lending and investment in climate-resilient projects such as renewable energy and hurricane-proof infrastructure.

The report, which will culminate in recommendations at Cop30 in November, finds that a full green energy transition could save the African continent up to US$5tn by 2050. Mohamed Adow, Power Shift Africa's director, stated that investing in renewable energy is the best option for the continent's people.

Meanwhile, the Australian Sustainable Finance Institute has developed a sustainable finance taxonomy, now being piloted with banks like Rabobank, the Commonwealth Bank of Australia, and Moody's Ratings. The taxonomy covers green and transition activities, including mining of key minerals like lithium and nickel, provided they meet specific emissions criteria.

The Caribbean Community's Committee of Central Bank Governors and the International Finance Corporation are also developing a regional green finance taxonomy to unlock climate investment across the English-speaking Caribbean.

The main barrier to financing the EU's green transition, according to the report, is not capital scarcity, but the poor bankability of green projects. To address this, the European Supervisory Authorities have opened a public consultation on their draft guidelines for integrating ESG risks into supervisory stress tests for banks and insurers, with feedback due by 19 September 2025.

The framework aims to strengthen investor confidence and reduce greenwashing risks while supporting capital allocation aligned with the Paris Agreement.

In the UK, the government is consulting on the exposure drafts of the UK Sustainability Reporting Standards, which are based on the International Sustainability Standards Board's framework, with the consultation open until 17 September 2025.

The Grantham Research Institute has released a report examining the growing risks banks face from climate litigation. Meanwhile, the Taskforce on Nature-related Financial Disclosures has launched a pilot programme for its new nature data principles, aimed at upgrading market access to high-quality nature data.

The taxonomy sets expectations for engagement with First Nations peoples and excludes fossil fuel extraction from eligibility. The African Energy Leadership report outlines a strategy for achieving 100% renewable energy across the continent.

Professor Sven Teske, who led the energy modeling team behind the technical analysis, stated that investing in renewable energy would replace fossil fuels and end energy dependence. Adopting the report's policy roadmap could make countries less vulnerable to currency fluctuations due to dirty energy imports.

The report suggests that fuel cost savings from a green energy transition could exceed the $7.3tn investment required. Access to the right nature data, in the right format and at the right time, is essential for businesses and financial institutions seeking to assess and manage their nature-related dependencies, impacts, risks, and opportunities.

However, currently, no specific information is available about which countries are collaborating with the IFC on developing a regional Green Finance Taxonomy. The pilot for the Taskforce on Nature-related Financial Disclosures' new nature data principles will run until October and test a set of principles for assessing data quality for reporting, target setting, and transition planning.