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ESG considerations following Labor’s win
Given the Albanese government’s focus on climate change moving forward, lawyers – particularly those in renewables and financial services – will have to consider the impact of such changes on ESG investments.
Jerome Doraisamy
The victory of Anthony Albanese and Labor – which lawyers saw coming, unlike other professional services strands – is set to have an impact on numerous areas of legal practice, including the future of class actions and litigation funding.
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For those in energy and resources, there is much to consider in extrapolating whether or not renewables will “ramp up” under the incoming Labor government.
According to a blog post from global law firm K&L Gates, the “development of clear and unambiguous guidelines for long term sustainable investment (an ESG investing taxonomy) would undoubtedly provide Australian fund managers, investors and investees additional transparency in their asset allocation decisions, projections and reporting”.
In conversation with Lawyers Weekly, K&L Gates financial services partner Jim Bulling (pictured) said that when it comes to ESG investments, lawyers are increasingly being asked to advise on the structure and content of sustainable investment mandates between institutional investors and managers, as well as the disclosure documents that funds and managers provide to retail investors.
“Amongst the ESG investment issues which are being discussed are whether products are true to label, how content and performance of sustainable mandates can be monitored and reported, how managers can demonstrate meaningful engagement with investees on climate change and the demonstration of best interests for underlying investors,” he said.
It is well understood, Mr Bulling continued, that the efficient allocation of private capital will play a crucial role in meeting the challenges of achieving net zero by 2050.
“While a number of jurisdictions in the northern hemisphere have made a material start on regulation for ESG investment, in Australia the regulatory environment is in the early stages of development.
“In these circumstances, financial services lawyers in Australia have a unique opportunity to not only be involved in the negotiation of meaningful ESG Investment issues such as the content of investment mandates and disclosure documents but also in moulding the shape of the regulatory regime which will need to be put in place to ensure system efficiency and equity,” he outlined.
Bearing in mind the “globally significant investment pool”, which is held within Australian superannuation funds, Mr Bulling added, financial services lawyers in Australia “have an important role to play” in addressing the allocation of private capital to meet the challenges presented by climate change, whilst at the same time looking after the best interests of retail investors.
