Australian Climate Transition Index
Climateworks Centre has worked with project partners to develop and launch the first ever forward looking climate transition index using dynamic climate scenarios in Australia. The Australian Climate Transition Index was jointly established by Climateworks Centre, BNP Paribas, Institutional Shareholder Services Inc (ISS ESG) and the Centre for Quantitative Finance and Investment Strategies at Monash University.
Enhancing Credible Transition Finance
The superannuation sector in Australia represents approximately AU$4 trillion of assets under management. By directing this vast pool of capital towards climate-aligned investments, Australia can do its part to limit global warming to 1.5° Celsius and position itself as a leader in the global net zero economy. Superannuation funds are regulated through the Your Future, Your Super (YFYS) annual performance test conducted by the Australian Prudential Regulation Authority. Treasury’s Sustainable Finance Roadmap highlights stakeholder concerns with the YFYS performance test design, suggesting it is a key barrier to integrating climate into investment decision-making. The roadmap also indicates the Australian Government’s plan to support credible business transition planning through best practice guidance, to be published by the end of 2025. With this growing momentum in Australia, Climateworks Centre has identified two opportunities to aid the transition to a net zero economy: A climate benchmark for YFYS Performance Test The YFYS performance test benchmarks superannuation funds against relatively high-emitting indices. Enhancing Credible Transition Finance proposes an optional, alternative set of ‘climate transition indices’ for superannuation funds to adopt in the annual performance test. This will ensure superannuation funds act in the best financial interest of their members while meeting their net zero 2050 commitments.