In a report, Out of Gas: Managing the decline of gas in Australia, the Grattan Institute argues governments have avoided difficult decisions about the long-term future of gas despite Australia's commitment to reach net zero emissions by 2050.

Speaking on the Grattan Institute podcast, energy program director Alison Reeve said gas use was already falling across households, industry and electricity generation, but not quickly enough to meet climate targets.

"We have to start grappling with the reality that gas is not going to last forever," Reeve said.

The report warns that while renewable gases, hydrogen and carbon capture technologies will play a role in reducing emissions, they will not be sufficient to sustain current levels of gas consumption.

"What that points you towards is we need to reduce the amount of gas that we're using," Reeve said.

Grattan said governments should provide clearer long-term signals, including setting phase out pathways for household gas use and better coordinating planning between gas and electricity networks

The report highlights the risk of a "death spiral" for gas networks as more consumers electrify, leaving fewer users to shoulder the fixed costs of maintaining pipeline infrastructure.

"The worry is that you could get into a situation with completely unmanageable gas bills for some people," Reeve said adding that vulnerable households could be disproportionately affected if governments fail to manage the transition.

The Grattan Institute also said policymakers need to rethink the future role of gas fired generation. While batteries are increasingly replacing gas for short term grid support, Reeve said gas would still be needed during prolonged periods of low renewable output.

"We know we're going to need it, and we know that there's going to be times when you get that two-week period in winter where its cloudy and its cold," she said.

Beyond domestic consumption, the report argues Australia should prepare for a gradual decline in its liquefied natural gas export industry as global decarbonisation efforts accelerate and international buyers reduce demand.

"We need to make sure that we are getting the best value that we can out of having an LNG export sector at the moment," Reeve said.

The report calls for governments to better integrate gas and electricity planning while ensuring taxpayers are not left carrying future rehabilitation costs from ageing gas infrastructure.

Cracking the code: Using nature data to understand the impact of the ASX200 assessed the nature-related impacts and dependencies of Australia's ASX200 companies, drawing on data from three widely used assessment tools GIST Impact, MSCI, and S&P to provide a comparative view of nature-related impacts.

The impact by the sectors is driven primarily by greenhouse gas emissions, water consumption and land use pressures.

The report noted sectors that appear to have lower impact when assessed on direct operations alone such as financials, IT and consumer staples, often exert significant influence on nature.

This can be through capital allocation, energy and water demand, and global value chains that can create impacts on ecosystems far from the physical footprint of a company, the report said.

"These impacts are currently difficult to capture using existing datasets but represent a growing source of unpriced risk for investors," the report read.

However, the report noted while there are significant gaps in the data available to assess nature-related impacts, these gaps should not justify inaction.

"The direction of risk is clear, and evidence across multiple datasets supports consistent sector level conclusions," the report read.

"Differences between tools primarily reflect methodological limitations, particularly the partial treatment of supply chain and financed impacts, rather than disagreement about the sectors in which nature-related risks are concentrated."

Where data is limited in understanding the individual company impacts, the report encouraged engagement for better company-level understanding using the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

"Investors can use capital allocation, system stewardship and company-specific engagement to address systemic and company-specific nature-related risks," the report read.

"Investors can use data from assessment tools and company reporting to identify drivers of nature loss, and the investors' points of leverage to address those key drivers."

The third guide in the series, Asking Better Questions on Nature, targets chief financial officers, providing a practical framework to assess how dependencies on nature could materially impact the financial performance, valuation and long-term strategy of their companies.

In using the guide, CFOs can integrate nature-related considerations across risk management, capital allocation, financial planning and performance management.

It helps CFOs keep in mind that business activities do contribute to nature loss, degrades nature's capacity to provide the inputs businesses across sectors need from it.

The guide also highlights the risks arising from a company's impacts and dependencies on nature can include stranded assets, disruption to operations, higher production costs, increased insurance premiums and reduced asset values.

TNFD chief executive Tony Goldner said nature has quickly moved from a corporate social responsibility and compliance issue to a strategic risk and opportunity management imperative.

He added that CFOs must now understand how the resilience of cash flows of their business depend on nature's flow of essential inputs into their operations and business model.

A4S executive chair Jessica Fries pointed to research indicating that 85% of companies in the S&P Global 1200 have significant dependencies on nature within their direct operations.

"[Therefore], gaining a better understanding of nature-related risks and opportunities, impacts and dependencies, is critical," she said.

The guide presents 11 questions for CFOs to consider on how nature-related information and insights can be integrated into financial and risk management processes. It also outlines the information they should look for in materials and recommendations prepared by their teams, helping them prepare for increasing scrutiny from boards, investors and other stakeholders.

Last year, the TNFD released similar guides for board directors and asset owner investment committees.

King Charles established A4S in 2004 with the aim of helping finance leaders adopt sustainable and resilient business models by giving them the tools to embed environmental and social risks directly into economic decision-making.

BDO's Global Risk Landscape 2026 report said Australian organisations are grappling with a risk environment where geopolitical instability, cyber threats, artificial intelligence and regulatory pressures increasingly overlap.

It found that 83% of business leaders believe risks are becoming increasingly interconnected and complex, while 89% said they now consider the interdependencies between risks when assessing threats.

Meanwhile, more than half of business leaders (52%) said they find it difficult to distinguish meaningful risk signals from background noise, while 55% said short-term operational pressures frequently override long-term risk planning.

Commenting, BDO Australia risk advisory partner Michael Hill said the findings highlighted a growing disconnect between the way risks emerge and the way many organisations continue to manage them.

"Risk is no longer a series of isolated events that can be managed within individual functions," Hill said.

"Geopolitical disruption, cyber threats, regulatory change and emerging technologies increasingly interact with one another. This means organisations need a clearer understanding of how these risks connect and what that means for decision-making across the business."

Hill said many organisations are still managing risk through disconnected functions, despite threats increasingly cutting across every part of the business.

"Risk doesn't arrive neatly packaged anymore," he said.

"A geopolitical event can become a supply chain issue, a cyber issue, a regulatory issue and ultimately a financial issue. Organisations that continue to assess those risks in isolation will struggle to respond quickly enough."

Businesses best placed to navigate uncertainty would be those that embed risk ownership more broadly across leadership teams, rather than leaving it solely to specialist risk functions, he added.

"Half of the business leaders surveyed said they believe risk information remains siloed across departments, while only nine per cent described their risk management approach as very proactive," Hill continued.

"This creates an environment where those best placed to navigate uncertainty will be those that embed risk ownership more broadly across leadership teams and operational functions."

The Lonsec Investment Governance Solution (IGS), which is integrated into the research house's iRate platform, is designed to centralise governance monitoring by bringing together fund ratings changes, performance trends, fee movements and other investment signals into a single reporting framework.

The launch comes as governance obligations across advice, superannuation and platform businesses continue to evolve, placing greater emphasis on demonstrating robust and defensible investment decision making processes.

Lonsec executive Lorraine Robinson said investment governance has become a critical focus across the financial services industry.

"Across advice licensees, platforms and trustees, expectations around governance have never been higher," Robinson said.

"Advisers and clients want to know that investment options are being monitored and accountability. The Lonsec Investment Governance Solution provides the framework and transparency that supports better decision making and greater confidence at every level," she said.

The solution seeks to address a common challenge for governance teams which continue to rely on spreadsheets and fragmented monitoring processes to oversee investment menus and approved product lists.

According to Lonsec, the platform creates a structured audit trail that enables organisations to document how investment decisions are reached and monitored over time.

Lonsec head of sales Anna Schofield said recent events across the financial services sector had heightened awareness of governance responsibilities.

"With recent high-profile failings in our industry, the focus on investment governance has intensified and the obligation on those who manage APLs and investment menus in particular has become clearer," Schofield said.

"By embedding governance signals directly within iRate, the Lonsec Investment Governance Solution gives investment teams and advisers greater clarity and confidence in decision making, with a clear and defensible record of how and why decisions were made," she said.

The solution is targeted at advice licensee, investment committees, trustees and platform operators seeking to strengthen governance frameworks while reducing the administrative burden associated with ongoing investment monitoring.

Lonsec said the offering builds on its existing research capability, which covers more than 1900 investment products and is supported by a local research team focused on the Australian market.

The move reflects growing industry demand for governance tools that can help firms evidence oversight processes as regulators place increasing emphasis on accountability, transparency and member outcomes.

The review examined 26 sustainability reports lodged by Group 1 entities under the Australian Sustainability Reporting Standards (AASB S2), which required companies to disclose how climate-related risks and opportunities could affect their financial performance and long-term resilience.

While the findings suggest large organisations are investing heavily in climate risk assessment, much of that analysis is not making its way into public disclosures.

Finity principal Sharanjit Paddam said the first reporting cycle demonstrated a strong commitment to meeting the new requirements but also highlighted inconsistencies in how companies approached disclosure.

"Reviewing these first reports has provided a real opportunity to understand how some of our largest corporations are interpreting and applying the detailed requirements of AASB S2," Paddam said.

"The analytical rigour is clearly there. What we expect to see develop over successive reporting cycles is greater confidence in translating that internal work into public disclosure," Paddam said.

The analysis found that 24 of the 26 entities reviewed voluntarily conducted climate scenario analysis, despite it not being explicitly required under the framework. Around 70% modelled three or more scenarios, exceeding the mandatory minimum of two.

However, while companies were undertaking increasingly sophisticated climate modelling internally, disclosure of the results remained limited. Most organisations published high-level quantitative assessments, with only a handful attempting to directly connect climate impacts to financial statements.

Finity's review also uncovered wide variations in the time horizons companies used to assess climate risks. Some organisations defined "long term" as little as five years, while others assessed impacts over 25 years or more, creating challenges for investors seeking to compare disclosures across sectors.

The divergence was particularly evident among resource companies, where reporting horizons ranged from five to 25 years despite operating within the same regulatory framework.

Transition plan disclosures also varied considerably. Some companies revised or scaled back emissions reduction commitments previously made through voluntary reporting channels, reflecting heightened scrutiny around target setting and greenwashing risks.

Paddam said organisations yet to enter the reporting regime should view climate disclosures as more than a compliance obligation.

"This is not a set and forget exercise, and Group 2 and Group 3 entities who treat it as a strategic planning tool rather than a compliance exercise will find it delivers value well beyond the report itself," Paddam said.

Under Australia's phased implementation timetable, Group 2 and Group 3 entities will begin reporting under the mandatory climate disclosures regime from 2027 and 2028 respectively.

The report, Societal Infrastructure Blueprint: A Roadmap for Pension Funds, argues retirement funds already generate significant social benefits beyond providing retirement incomes, but often fail to recognise, measure or communicate that value.

Developed by a working group comprising almost 20 pension fund leaders globally, the framework outlines how funds can strengthen their contribution to member wellbeing and broader economic resilience while remaining firmly anchored to their fiduciary duties.

The report arrives as pension systems face mounting pressure from aging populations, growing inequality and changing member expectations. According to the blueprint, the global population aged over 65 is expected to exceed 1.6 billion by 2050, while infrastructure investment gaps in areas such as housing, healthcare and education are forecast to reach US$15 trillion by 2040.

With pension funds collectively managing more than US$56 trillion in assets worldwide, the report positions the sector as uniquely placed to help address these challenged through its long-term investment horizon scale.

"Understanding how pension funds build social infrastructure is especially important now, as aging populations and rising inequality are starting to strain public systems, and evolving member expectations challenge existing pension models," Working Group co-plead Gareth Gibbins said.

"This Blueprint gives pension funds a practical, structured path to recognize that role, act on it, and measure it, without stepping outside their fiduciary mandate."

The framework is built around three stages. The first encourages funds to identify and communicate the broader benefits they already deliver, including reducing elder poverty, improving health outcomes and supporting social cohesion.

The second stage focuses on optimal initiatives that can deepen social impact, including investments in affordable housing, healthcare infrastructure and education alongside expanded member services such as financial literacy programs and wellness support.

The final stage centres on measuring outcomes through tools such as social return on investment and wellbeing valuation frameworks, enabling funds to quantify and report their broader social contribution.

The report argues stronger measurement and disclosure will improve transparency, strengthen member trust and help funds demonstrate their value to policymakers and stakeholders.

Drawing on case studies from Denmark, Singapore, Canada and Australia, the blueprint concludes social impact should not be viewed as an adjunct to pension fund activity, but as a natural extension of the sector's core purpose of delivering long term financial security and societal stability.

Munro said the move expands access to a strategy focused on companies positioned to benefit from the global decarbonisation trend.

The fund, which is available through NZX Wealth Technologies and Consilium Wrap, invests in a concentrated portfolio of global equities across four themes: clean energy, clean transportation, the circular economy and energy efficiency.

The strategy was initially launched as a wholesale fund in New Zealand in March 2025 through a partnership between GSFM and Munro Partners. Since launch, it has grown to NZ$71.82 million and delivered a return of 70.4% net of fees in the 13 months to 30 April 2026.

GSFM chief executive Damien McIntyre said the fund offers investors exposure to one of the most significant long term, structural shifts underway in global markets.

"As global capital markets continue to shift towards sustainability and thematic investing, the Fund will become increasingly relevant," McIntyre said.

"Having the support and seeding from KiwiSaver providers, Aurora Capital and SBS Wealth has strengthened our ability to deliver these products to New Zealand investors," he said.

The move comes as asset managers continue to develop products tied to energy transition and climate related investment opportunities, despite growing scrutiny around sustainable investing claims globally.

Munro Partners' Climate Leaders strategy seeks to identify companies expected to either enable or benefit from decarbonisation, reflecting a thematic approach that focuses on long term growth drivers rather than traditional sector allocations.

GSFM said demand from wholesale investors has supported the fund's growth since launch prompting the expansion into the retail market.

McIntyre said the firm was also assessing whether additional investment strategies could be introduced to address gaps in the New Zealand market.

"The GSFM team is reviewing its other existing strategies, as well as assessing new ones, to determine which will be suitable to fill in an investment gap for New Zealand investors," McIntyre said.

The fund is managed and issued by Adminis Funds Limited and represents the firm's first retail fund offering in New Zealand.

The Innovate RAP builds on the first one delivered in 2024 and is underpinned by partnerships with First Nations-led organisations, including First Nations Foundation.

"From our Reflect RAP, we learned more about First Nations cultures, built awareness across our organisation and established relationships with our industry partners," ART said.

In the next two years, the $370 billion super fund is aiming to deliver financial education designed for First Nations members, strengthen culturally informed member support and amplify First Nations voices through responsible investment stewardship,

It is also building a "culturally safe" and inclusive workplace, as it works towards a 2% First Nations workforce target.

The super fund noted that many of the Aboriginal and Torres Strait Islander members continue to face systemic barriers navigating the superannuation system, including the proof of identity, skills and knowledge in finance, usage of services, early access to super, and more.

ART chief investment officer Ian Patrick, who is also the sponsor of the plan, commented those are the gaps the super fund is trying to fill.

"It's about making sure we make a difference in their lives, in the communities that we serve and in making the system better overall for our members," Patrick said.

"Across our services and partnerships and the way we work, we're focused on improving financial outcomes for everyone and building long-term trust in the system. Our Innovate Reconciliation Action Plan is an important way that we can deploy our efforts to help deliver for our members."

Senior economist Benjamin Trevis and economist Marco Santaniello said output per capita which speaks to living standards would fall in most destination economies as productivity gains from improved labour market allocation would be lost.

The report highlighted the size of the hit would vary based on the working-age share of each country's migrant inflows.

"Output per capita falls by around 12% by 2060 in Spain, reflecting heavy reliance on working-age migrants, while there is a more modest decline of around 1% in the US as its inflows are more mixed in age composition," the report read.

Australia and Canada stood out as exceptions, with output per capita rising around 1% and 4% respectively.

"Both countries receive a high share of inflows that are largely outside the labour force; removing these inflows reduces population more than it reduces the workforce, so the capital stock is shared among a workforce that is only slightly smaller, lifting capital per worker and pushing output per capita above our baseline," the report read.

The report noted in the near-term, no migration would have an impact on demand as migrants are "first and foremost consumers".

"Removing future inflows to destination economies forgoes would-be migrant spending on housing, goods, and services, dampening aggregate demand and weighing on inflation in the early years of the scenario," the report read.

"The drag on demand is partly cushioned by the fact that, although earnings vary across the skill distribution, migrants typically earn below the host-country average and are concentrated in lower-earning sectors."

In the long-run, however, the productivity hit would compound the labour supply shock.

The report states the productivity impact would be seen through two channels: high-skilled migrants generating knowledge transfer and innovation spillovers and migrants at all skill levels who fill structural gaps and free domestic workers to move into more productive roles.

"Total factor productivity is smaller in the near term but builds over time, becoming a material drag from the 2030s onwards as the loss of knowledge transfer and labour market allocation gains compounds," the report read.

Origin countries would have a positive outcome in this scenario, particularly those that have historically seen large numbers of workers move abroad such as Pakistan, the Philippines, and parts of Eastern Europe as migrants stay back and lift aggregate output.

Output gains, however, are limited as the productivity channels are markedly weaker than in destination economies, where larger inflows and a higher concentration of high skilled migrants amplify the uplift.

The report noted ageing economies will face sharper fiscal challenges without migration as immigrants tend to arrive at prime working age, contributing more to taxes and social contributions than they receive in social protection, housing, health, and education spending.

The "zero migration" scenario is an extreme, the report said, and its value lies in quantifying the contribution that migration makes to long-run growth, against which actual outcomes and policy responses can be benchmarked.

Drawing on the 2026 Australian Financial Review Rich List, Oxfam found the country's billionaire class now controls more than $686 billion in wealth, with the number of billionaires rising to a record of 178, up 17 from a year earlier.

The organisation said the figures highlights a growing divide between Australia's wealthiest individuals and households facing persistent cost of living pressures, including rising housing, grocery and energy costs.

According to the analysis, the nation's 20 richest Australian's now hold more wealth than the bottom three million households combined.

Oxfam said the $25.67 billion increase in billionaire wealth over the past year alone could have funded significant social outcomes, including lifting nearly one million Australians out of poverty, covering household electricity bills nationwide for more than a year, or funding Australia's aid budget almost five times over.

Oxfam chief executive Jennifer Tierney said the findings underscored the need for broader tax reform to address rising inequality.

"As ordinary Australians continue to feel pressure at the checkout, at the petrol pump and when paying rent or mortgages, billionaire wealth is continuing to surge," Tierney said.

"There is something fundamentally wrong with a system where extreme wealth keeps skyrocketing while so many people are struggling to afford the basics, and governments claim there is not enough money for housing, healthcare, climate action and essential services," she said.

The comments come after the Federal Budget introduced measures aimed at easing cost of living pressures and reducing some tax concessions for higher income Australian's, including changes to capital gains tax and negative gearing arrangements.

While welcoming those reforms, Oxfam argued they do not go far enough to address structural wealth inequality.

"While modest, reforms to capital gains tax and negative gearing are important steps towards a fairer tax system," Tierney said.

"Australia should not continue rewarding wealth accumulation more generously than work, particularly at a time when so many households are under pressure."

The latest findings build on concerns raised by Oxfam earlier this year, when the organisation reported the average Australian billionaire's wealth increased by almost $600,000 a day in 2025, with collective billionaire wealth rising by more than $10.5 billion.

Oxfam has consistently argued that stronger tax measures are needed to address the growing concentration of wealth. The organisation has previously called for a net wealth tax on the richest 0.5% of households, the removal of the capital gains tax discount for individuals and trusts, and the abolition of negative gearing concessions. According to its analysis, a 5% tax on billionaire wealth could have raised $17.4 billion in a single year, funding measures such as universal affordable childcare, extended energy bill relief and increased humanitarian assistance.

The announcement follows earlier engagements with potential partners, including developers, generators, electricity distributors, and suppliers earlier this year in the North West Minerals Province across Mount Isa, Cloncurry, Julia Creek, and Richmond.

The fund is considering proposals ranging from new energy generation projects, gas and battery storage systems, as well as broader support for the North West Power System.

Alongside progressing localised energy solutions, the fund will also set out the operational and infrastructure requirements to coordinate and de-risk future investments in the region, informing planning for the CopperString Western Link between Hughenden and Mount Isa, QIC said.

QIC has released investment guidelines to support the call for proposals, focusing on key criteria around reaching commercial operations by 2030 and improving energy costs around the region.

Commenting, QIC head of global infrastructure Ross Israel said the feedback from market sounding had provided key insights to allow QIC to fast-track opportunities to connect private capital with priority projects.

"Supporting near-term investable projects that deliver reliable, affordable and sustainable energy will help unlock economic development opportunities in the North West," Israel said.

"A critical piece of this work will be undertaking the work required to define the end-state system to optimise the opportunity set in the region.

"QIC's role is to turn the objectives of the Queensland Energy Roadmap into investable projects that deliver reliable, affordable and sustainable energy and the North West Energy Fund presents a clear pathway for QIC to partner on near-term opportunities."

Meanwhile, treasurer and minister for energy David Janetzki said the fund builds on the Queensland government's commitment, including the CopperString project.

"This fund enables us to pass on the benefits of CopperString to communities west of Hughenden while advancing the accelerated delivery of the project's Eastern Link." Janetzki said.

He added the fund has backed practical projects to deliver more affordable and reliable power that drives the state's economy.

"Strong feedback was received during market sounding and new renewable energy generation to service the Dugald River Mine is already being considered, alongside other proposals," he said.

"To progress economic development in the North West, we need investment in flexible solutions that reduce the cost of energy to make industry more competitive.

"The North West Minerals Province is one of the richest mineral producing regions in the world, potentially holding $700 billion in critical minerals. Further unlocking opportunities will help deliver even more benefit for Queensland's economy."

The rules were first proposed in 2022 under the Biden administration. Two years later, the SEC approved amendments to the rules under the Securities Act of 1933 and Securities Exchange Act of 1934, mandating public companies to disclose detailed information on climate-related risks, greenhouse gas emissions, and the financial impacts of extreme weather events on their business models, strategies and outlook.

However, the rules never officially took effect after facing setbacks and legal challenges.

In April 2024, the SEC stayed the climate disclosure rules pending completion of consolidated litigation in the US Court of Appeals for the Eighth Circuit.

In March 2025, the SEC voted to end its defence of the rules and by September, the court placed proceedings on hold to allow the SEC to reconsider its position.

The SEC is now attempting to officially rescind the rules, submitting a proposal to the Office of Information and Regulatory Affairs on May 4 to do so.

The SEC said the rules impose substantial costs on public companies and their shareholders that are not justified by the informational benefits they may provide to some investors, arguing they undermine its objectives of facilitating capital formation and promoting public company status.

The SEC further contends that mandating prescriptive climate disclosures conflicts with its long-standing registrant-specific, materiality-based approach, which allows companies to determine what information is financially relevant to investors.

Paul S. Atkins, the chair of the SEC, said the rollback would return the commission to its core mandate in line with its legal authority.

"SEC disclosure obligations should comply with the commission's statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behaviour, and be imposed only when the expected benefits justify the likely costs and burdens," Atkins said.

Question:

What is the HALO trade, and why are asset-heavy companies suddenly attracting investor attention in the age of AI and decarbonisation?

Short answer:

The HALO trade (Hard Assets, Low Obsolescence) is reshaping investment strategies. According to Dierdre Cooper, companies tied to physical infrastructure (like grids, pipelines, and industrial equipment) are seeing renewed growth as AI drives demand for electricity and hard assets. Unlike asset-light sectors threatened by automation, these companies are essential for electrification and climate solutions. Investors who focus on this theme may benefit from attractive valuations and strong growth, especially as decarbonisation and electrification accelerate globally.

Why it matters:

For sustainable investors, the HALO trade highlights a shift from tech and asset-light stocks to companies with tangible, enduring value. Understanding this trend means recognising the importance of infrastructure, energy storage, and electrification in a world increasingly powered by AI and climate technology. Missing this shift could mean missing out on the next wave of growth and resilience in global portfolios.

Sources:

• Michelle Baltazar, executive director of media, FS Sustainability

• Dierdre Cooper, head of sustainable equity, Ninety One

• Ninety One Global Environment strategy

• Companies: Contemporary Amperex Technology Co., Limited (CATL), Hongfa Technology, Shaman Electric Co., Limited, Infineon Technologies, TE Connectivity

• Industry context: MSCI All Country World Index, decarbonisation trends

Timestamps:

00:00 Asset-heavy companies and electrification

00:29 HALO trade explained

01:24 Ninety One's sustainable investing approach

03:15 Global environment strategy vs traditional equity

06:11 AI, asset-light vs asset-heavy sectors

08:32 Data centres and electricity demand

11:30 PE multiples and growth outlook

13:13 Market cycles and investor sentiment

14:28 Electricity as "all of the above" solution

17:25 Exciting trends for the next decade

19:52 Autonomous robots and electrification

20:42 Risks and selectivity in thematic investing

21:33 Wrap-up and final thoughts

We record on Gadigal Land and we pay our respects to the traditional custodians of country and elders past and present.

https://www.fssustainability.com.au/

The funding increases ARENA's total support for the project to $16.8 million and will significantly scale participation in the trial. The number of households with V2G capability will increase from 50 to 1000 while households participating in smart EV charging will more than double from 950 to 2000.

The expanded project will allow EV owners to automatically charge their vehicles when electricity prices and emissions are low, while also enabling eligible vehicles to export store energy back to the grid during periods of peak demand.

ARENA chief executive Darren Miller said the initiative would help address some of the key challenges preventing broader V2G adoption.

"To unlock V2G at scale, we need to bring together customers, car makers, networks and technology providers," Miller said.

"A big part of that is giving manufacturers the confidence their vehicles will perform as expected including through validated approaches to battery use and warranties," he said.

The project will initially work with Chinese electric manufacturer BYD to implement charging standards that support bidirectional charging, while also conducting real world battery testing to address warranty concerns.

According to ARENA, the expanded rollout is expected to provide valuable insights into customer behaviour, technology performance and market integration, helping shape future policy settings and industry investment.

"This project brings those pieces together to demonstrate how EVs can become an active part of the energy system," Miller said.

"That means savings for owners and better utilisation of the grid, which can bring down the cost of the network for everyone."

The announcement adds to ARENA's growing role in delivering Australia's energy transition. Earlier this month, the agency was tasked with administering the federal government's $1.1 billion Cleaner Fuels Program and is progressing the next stage of its Hydrogen Headstart initiative. Reinforcing its position at the centre of Australia's decarbonisation and energy security agenda.

The Amber Electric expansion forms part of ARENA's Driving the Nation Program, which is focused on accelerating electric vehicle uptake and supporting technologies that improve energy system flexibility.

"Australia is at a critical juncture in energy policy. The decisions made now around gas will have lasting ramifications. The gas transition will not get easier or cheaper if we wait. The choice is between chaotic and inequitable, or steady and fair. It's time to move," the report said.

The Out of gas: Managing the decline of gas in Australia report said the fall in the use of gas has created new problems in the energy market.

"Electricity networks are under strain, backup generation for the power system is not being built fast enough, gas bills are rising, and manufacturers are closing," the report read.

"The energy transition is also a transition for gas - from a widespread fuel to one that occupies some vital but small niches in a mostly-electrified economy."

The report said the government must take control to both accelerate and manage the gas transition. To phase out the use of gas, it recommended methodically and predictably reduce gas use across the economy which would include setting phase-out dates for the use of gas in households.

"Each sector will move at a different pace, depending on its options. Even in a mostly electric economy, there will still be some residual demand for gas," the report read.

To meet this demand, the report said Australia will need supplies of renewable gases such as biomethane and hydrogen, which the government can drive through the development of targeted grants, finance and a demand-side obligation.

A declining gas market will need to be managed very differently, the report said, to avoid sky-rocketing prices for consumers and stranded assets for gas network owners.

The role of gas-powered electricity generation is also changing, which is running less often, but is increasingly valuable as a backup during rare renewable energy droughts, the report said.

"The federal and state governments should use upcoming reforms to the wholesale electricity market to remove financing barriers for new gas-powered generators," the report read.

"Without integrated planning, consumers and taxpayers are exposed to the risk of over-investing in gas and under-investing in electricity infrastructure. Gas and electricity system planning should be integrated to keep infrastructure costs low and ensure the electricity network can handle increased demand from gas-to-electric switching."

According to the authority, environmental crime encompasses deliberate acts or negligence that cause harm to the environment and often linked to transnational organised crime including unlawful pollution and waste, wildlife trafficking and illegal logging and timber trade.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) chief executive Brendan Thomas said the funding will help the organisations identify drug trafficking, child sexual exploitation, environmental crime and other serious crimes affecting Australia and the region.

Thomas was also recently appointed to co-chair the Pacific Financial Intelligence Community (PFIC) initiative and noted the funding will be important to identify bad actors at its source.

"These crimes cause significant harm to Australian and Pacific communities and every dollar laundered helps them flourish," he said.

"AUSTRAC's long-standing Pacific partnerships are aimed at helping the region better detect and disrupt illicit money flows linked to transnational organised crime.

"With this funding AUSTRAC will strengthen those capabilities even further - including using artificial intelligence to more effectively detect illicit financial flows and to ultimately protect communities across the region and in Australia.

"This investment is about giving Pacific partners the tools and skills to follow the money behind serious crime, ensuring Pacific partners are equipped to protect their financial systems and, in turn, Australia's."

AUSTRAC is also expanding training and mentoring for analysts and regulators, focused on practical detection techniques, emerging criminal trends impacting the region, and stronger engagement with reporting entities, it said.

"This is a long-term partnership. We're working side by side with Pacific agencies to build capability, share intelligence and stop criminal activity at its source," Thomas added.

AUSTRAC works closely with the Department of Foreign Affairs and Trade, the Australian Federal police (AFP) and regional partners to deliver programs as part of Australia's broader commitment to stability, security and prosperity in the region.

O'Rourke said the regulator, however, does not want the baseline to become the benchmark.

"Instead of apples and oranges, we're kind of in the orchard where the apples come in different shapes. They're not kind of that uniform [shape] that you see in the supermarket yet, but they are all apples for apples. And we're moving into the comparability that's much easier than we were in the apples and oranges world," she said.

On its observations from the early reporting, ASIC reiterated the importance of being clear and effective on the judgements that are applied in preparing climate statements.

"We think that close attention is required to disclosure of judgements for helping readers understand what weight to put on information," O'Rourke said told the recent Responsible Investment Association Australasia (RIAA) Conference.

She added it is important that the disclosure of voluntary or additional climate-related information doesn't obscure the mandatory and material climate-related financial information.

"There was a lot of latitude historically, including putting it together, and we recognise people might want to convey additional information as well. There's no problem with that. It's just about [ensuring] the line between the statutory information is well defined and any other information," she said.

ASIC has also seen issues where people were cross-referencing to things that didn't meet the requirement set in the reporting framework.

"Standards in relation to cross-referencing are actually quite specific and prescriptive. The cross reference to another report to introduce that into the report has to be available on the same terms and at the same time," she said.

The regulator is also keeping an eye out on the issue of disclaimers being in conflict with the statutory framework and the objectives.

ASIC's issue with prospectuses and other documents are also under the spotlight.

"It's not new. But if they go too far, if people try and disclaim the capacity to rely or use the information too far, then that's inconsistent with the requirements of the climate reporting," O' Rourke said.

She highlighted the importance of using past events, current conditions, and forecasts consistently as ASIC saw instances of companies preparing their risk disclosure without referencing past events that happened to that company.

Another area that stood out for ASIC included climate-related targets set by companies.

"Lots have, but they were varied, especially whether they had a climate-related target. So different approaches to the assessment of whether targets had to be met under law or regulation... so just that concept of whether it's required or not," she said.

O'Rourke said ASIC as the regulatory body aims to take a pragmatic and proportionate approach to supervision and enforcement as the requirements are being phased in.

Released this week, Homes for Australia: A national plan consolidates national reform agenda spanning supply, rental protections, home ownership and homelessness support.

At the centre of the strategy is an ambitious target to deliver 1.2 million new homes by 2029, alongside Commonwealth-backed support for up to 420,000 homes over the next decade.

The government said the plan responds to decades of structural deterioration in housing affordability, with house prices climbing from around three times average incomes four decades ago to roughly eight times today.

Minister for housing Clare O'Neil said Homes for Australia is the latest initiative from the Albanese government and brings together the progress already made, including the actions taken in the 2027 Federal Budget, into a comprehensive national plan.

"This plan is a chance to take stock, outline the progress so far, and set out a blueprint for the further work needed to build a housing system that works for all Australians," she said.

The strategy places heavy emphasis on increasing housing supply through planning and zoning reform, faster approvals processes and major investment in enabling infrastructure, including transport links, sewerage, utilities and serviced land.

It also seeks to address workforce shortages and productivity constraints in the construction sector through skills development, streamlined building regulations and greater use of prefabricated and modern construction methods.

Alongside supply-side reforms, the plan introduces significant tax changes aimed at redirecting investment toward new housing stock. From 2027, negative gearing will be restricted to newly built housing, while the capital gains tax discount will be replaced with an indexation model.

The government said the changes are designed to encourage investment into housing supply rather than existing dwellings, while helping level the playing field first home buyers.

Support for aspiring homeowners will also be expanded through the 5% Deposit Scheme and the Help to Buy shared equity program, which is expected to support 40,000 households. The plan also commits delivering 100,000 homes reserved for first home buyers.

Renters are another major focus of the strategy, with the government proposing a national "Better Deal for Renters" agenda that includes stronger tenant protections, limits on rent increases, bans on rent bidding and improved minimum rental standards.

The plan also aims to accelerate growth in the build to rent sector and further expand Commonwealth Rent Assistance.

Meanwhile, the government pledged to grow the social and affordable housing sector, targeting 55,000 supported homes over five years, including 40,000 through the Housing Australia Future Fund.

Additional funding will also be directed toward homelessness services, crisis accommodation and First Nations housing, with the plan prioritising community led delivery models and alignment with Closing the Gap objectives.

The others to receive recognition are AustralianSuper, Aware Super, CareSuper, Cbus Super, Equip Super, Hostplus, TelstraSuper and UniSuper.

RIAA said Responsible Super Fund Leaders represent the highest-scoring super funds assessed across governance, commitment, implementation, outcomes and transparency.

In the Responsible Investment Leaders category, some of the 47 fund managers to be recognised include Aoris Investment Management, Ausbil Investment Management, Clean Energy Finance Corporation, First Sentier Group, Impax, MFS Investment Management, Mirova, Pella Funds Management, Resolution Capital and U Ethical Investors.

For the 2026 Responsible Investors category, some of the standouts this year include Dexus, DNR Capital, Ellerston Capital, Federated Hermes, Firetrail, Loftus Peak, Northcape Capital, Platinum Investment Management and Wavestone Capital.

RIAA assesses Responsible Investment Leaders and Responsible Investors across four pillars covering commitment, ESG integration, stewardship and capital allocation.

Organisations recognised this year have demonstrated strong governance frameworks, systematic integration of ESG factors into investment decision-making, and transparent reporting on long-term outcomes and stewardship activities, including use of independent verification.

They have also contributed to higher standards across the market, such as more consistent disclosure practices, improved visibility of ESG risk management processes and clearer evidence of how responsible investment approaches are being implemented in practice.

RIAA unveiled the list at its 2026 annual conference held in Melbourne.

"Responsible investment is entering a more mature phase, where leadership is defined by what organisations do, not just what they say," RIAA co-chief executive Estelle Parker said.

"We're seeing leading organisations lean into transparency, governance and evidence, translating intent into practice through clearer disclosure, stronger reporting and the use of independent verification. That's building confidence for investors and strengthening trust across the market."

Capping the second and final day with a word cloud flashed on the big screen, this year's registrations of more than 700 in-person and online, hashtagged 'systems thinking' as their main takeaway.

Earlier that day, Rick Alexander, chief executive of Shareholder Commons, had spoken in a panel titled: Investing in an interconnected world: Systems thinking for long-term value.

That session pulled together many of the themes from Day One - from preserving cultural heritage and operationalising nature to understanding biodiversity risks, assessing the impact of the country's largest companies and recognising how geopolitical shocks will sharply raise the cost of capital.

The RIAA team assembled a strong line-up of presenters and workshop facilitators over both days, which allowed RIAA members plenty of time to take notes, get research and network.

Unrelated to the sessions but unmissable was the sheer size of the venue. The Plenary Hall and exhibition hall towered at more than 16 meters high, disproportionately dwarfing everything else in the area. Two coffee carts kept everyone adequately hydrated (and caffeinated) while lunch and tea breaks catered well for all preferences.

Carl Prins, chief executive of Pathzero, one of the exhibitors, said a conference highlight for him was the workshop with asset owners and managers on mandatory reporting where participants discussed the challenges with transparency and disclosure. "The lack of information means they can't quantify the risk in portfolios," he said.

Meanwhile, Alexandra Brown, founder and chief executive of Ethical Invest Group, said, "Renewables and fossil fuels were the biggest issues from clients according to poll results, but it was great to see a broad variety, including modern slavery and some clients asking for exposure to defence."

"The conversations around these issues are getting more sophisticated, and advisers can gain insight with these topics by attending the conference."

Recordings of the live-streamed sessions will be available in the coming weeks.

On the second day of the RIAA Conference yesterday was a formidable roster of panelists including a leading researcher that rates more than 5000 fund products, a fund manager with more than $1.4 trillion in assets under management and two super funds with a combined retirement pool of $400 billion.

Anchoring the product labelling expertise in the session were RIAA's top policy and certification experts.

Shamir Popat, senior manager research analyst at Morningstar, delivered some home truths, particularly with the defence sector outperforming most indices in the last 12 months.

"You had the guys who were saying, 'We will never buy weapons'. What's happened since then? Ukraine war with Russia. What's happening in this year? Managers are walking back on their values because of the way the world has changed."

It's like the world of sustainable investing has momentarily ground to a halt.

"Values are taking a backseat to performance. It's that simple. We're at a point in the market cycle where momentum in some of these themes is so high and the market is so narrow that everything else is taking a backseat."

Staying on theme, Bhanu Singh, chief executive officer in Australia for Dimensional Fund Advisors, said that historic data is yet to borne out a strong correlation between ESG metrics - and associated labelling - with returns.

"Around the late 2000s, we launched a series of commingled strategies around the globe for investors.

"So far, we haven't seen any link between ESG metrics, such as emissions because that's where the data is really strong, and any additional information about returns in your portfolio.

"The premise that you can buy companies or overweight companies that have lower emissions, should lead to outperformance - that it gives you more information than what you already know from their prices and cash flows - we don't see any evidence to suggest that," he said.

It's also hard to see the impact of exclusions from a return's perspective.

"If you look at a trading market, and you go back to the history of the ASX300 and start excluding all the energy stocks - and look at the performance of the ASX300 with and without energy stocks - it's almost identical over that entire period," he said.

"Sectors go in and out of favour, and when you take on something like a sustainability overlay, you will end up with bets against or for certain sectors."

New label: Responsible ownership

Taking it a step above fund labelling, Liza McDonald, head of responsible investment at $235 billion fund Aware Super, called their whole-of-fund approach as 'responsible ownership'.

"We will be the owners of the market, but what we want to do is own those assets responsibly and that comes into play around ESG integration and stewardship, and they're the main ways in which we manage our portfolios," she said.

"We do acknowledge that a number of our members do want to invest their money in line with their value so we do offer what we term 'socially conscious' options."

These options are predominantly based on a screening approach.

"There's fossil fuel screens, ethical screens and then there are screens around conventions and controversies," she said.

With the conflict in the Middle East and the Russian invasion of Ukraine in 2022 really changing the game for the defence sector, Aware Super has listened to its members regarding investing in weapons.

"When we looked at introducing a weapons exclusion, we found that it would introduce a huge tracking error into those options, but that's what our members wanted, so we've still got to balance that return and we've got to think of a way to do it," McDonald said.

"We offer these products because members want them. It's our job to make sure we're meeting that. We need to make sure we're offering a portfolio that speaks to the 'Your Future, Your Super' test."

UniSuper on the 'sensible middle' approach

Unisuper, which from July 1 updates its negative screens on companies with revenues associated with conventional weapons under its sustainable options, was also on the panel with Jodie Barns, manager of ESG investments, acknowledging the dichotomy of returns versus values in their membership.

She said three in four members would like to invest sustainably but only if they're not worse off than a typical member in a mainstream option.

"So, we know that sustainable investing and giving members this choice is important, but making money is important, too," Barnes said.

"My greatest worry about anything that restricts our investable universe sufficiently is that we are no longer able to provide choice and provide a retirement product that is sensible for our members."

Going back to the core topic of product labelling, all the panelists agreed that hard-and-fast rules don't work.

"I very much think that a principles-based approach and a nuance-based approach, rather than a tick-boxing exercise is the right way. If someone's angry at you somewhere, you're probably in the sensible middle."

On the upside, Morningstar's Popat said that what the geopolitical shocks had done for the sector is eliminate the pseudo-sustainable products and strategies in the market.

"One of the biggest things we've seen is that the greenwashers get taken out. The funds that were launched too quickly in 2018 [to ride the sustainability] trend, trying to capture flows, their products didn't reach viability and we've seen the record levels of closures in the last year."

At the very least, product labelling should continue doing that - get rid of the greenwashing.

Shalini Samuel, head of certification at RIAA, said that RIAA runs a year-long certification program that's anchored in the responsible investment standard which ensures what is said on the tin then translates across into portfolio construction and the interim disclosures.

"We absolutely do want labelling to ensure that things do not mislead. That's the core objective of labelling," she said.

FS Sustainability is a media partner of the 2026 RIAA Conference held in Melbourne May 27-28.

Alonso, the worker engagement officer at Cleaning Accountability Framework (CAF), shared her testimony about wage theft and unsafe workplace conditions when she worked as a cleaner.

"During COVID, my coworker behaved in a very intimidating way to me, making inappropriate comments... I was scared, so I stayed quiet."

She said many temporary visa holders faced unpaid trials, and even when they were paid, they often missed out on minimum wage, super and other basic entitlements.

"Many workers are afraid of losing hours or losing their job completely. That's why they just stay quiet."

Call for reforms

Anti-slavery commissioner Chris Evans said that the standards are "nowhere good enough" and companies should do more to uncover any modern slavery practices within their supply chain.

The commercial property, hospitality and agricultural sectors are among those heavily exposed as they sub-contract service jobs.

Evans drew on a major study of worker conditions by the Migrant Jutice Institute released earlier this month to call for reforms.

"Three-quarters of the 10,000 [surveyed] reported having been underpaid... That's not an occasional breach by a rogue employer. That's the system not working."

He said the red flags are easy to spot. Companies should check if there are multiple subcontractors under the same contract and whether staff are getting paid under the standard full-time wage slips or through ABNs.

"These are systemic issues... subcontracting on subcontracting on subcontracting, and multiple ABNs... all those things are warning lights."

Evans is campaigning for tighter rules and penalties for non-compliance.

At present, the Modern Slavery Act reporting requirements only apply to companies with at least $100 million in revenues, but the government wants to lower that threshold to $50 million, with a public consultation now underway to pass that into law.

Material risk to investors

Panel moderator Måns Carlsson OAM, head of ESG and co-portfolio manager at Ausbil Investment Management, said that workforce conditions that heighten the possibility of Modern Slavery Act breaches impact investments, not just as 'negative surprises' to the market but also in transparency.

"We have been encouraging more disclosure... but we will never know how many companies have found cases [of workplace violations] and just cut the suppliers. That's a big unknown."

Carlsson, who is part of the RIAA board, participated in a workshop at the conference designed to help financial advisers better understand how to exclude harmful human rights practices from their investments.

His fellow workshop host, Rachel Alembakis, stewardship manager at U Ethical, said, "The point of the workshop was to help participants understand and practice using the tools and strategies necessary to engage with companies to support them in finding, fixing and preventing modern slavery in a collaborative and open way."

"It was pleasing and fulfilling to see participants wholeheartedly take up the scenarios and work through the strategies and we hope they have become more comfortable with engaging on this issue."

Besides industry workshops, portfolio companies can also engage with advocates like Alonso through her employer CAF, which runs a certification scheme to eradicate Modern Slavery in supply chains.

Commissioner Evans' key message to the conference delegates is to help shape policies and operations based on lived-experiences of survivors and to encourage reporting of modern slavery non-compliance.

"The Modern Slavery Act is designed to find modern slavery and remediate it... I congratulate the companies who find it, because they're looking properly."

"People declaring they're finding it is an example of the system working."

FS Sustainability is a media partner of the 2026 RIAA Conference held in Melbourne May 27-28.

The tender, announced under the Queensland Energy Roadmap, seeks private sector proposals for utility scale gas-fired generation projects capable of supporting peak demand and firming intermittent renewable energy supply by 2032.

QIC said the process follows extensive market sounding activity conducted across late 2025 and early 2026, which attracted interest from around 40 participants.

QIC head of global infrastructure Ross Israel said the tender is focused on securing flexible generation capacity capable of supporting system resilience as renewable penetration increasing across the electricity network.

"The tender will be conducted through a staged evaluation process, with proponents assessed on their ability to build and deliver the required new gas fired generation capacity into the market, project readiness, capability, track record, and the overall value they can provide to Queensland electricity consumers and the state," said Israel.

Proposals incorporating complementary technologies or broader infrastructure solutions will also be considered, provided they align with the core requirements of delivering 400MW of additional gas-fired capacity.

The initiative reflects the increasingly prominent role gas generation is expected to play in maintaining grid stability during Australia's energy transition, particularly in industrial regions such as Central Queensland where energy demand is forecast to grow.

According to QIC, Queensland produced nearly $27 billion of gas last year, directly supporting around 9000 local jobs.

Forecast cited in the tender documentation indicate Queensland could have up to 4.1-gigawatts of gas-fired generation capacity by 2030, increasing to between 6.1 and 8.3-gigawatts by 2035.

The additional generation capacity is expected to support both energy security and future industrial demand, particularly as coal-fired power stations progressively retire and renewable energy projects expand.

The tender process is scheduled to conclude by the end of 2026, with successful projects expected to be operational by 2032.

Allan James, head of indigenous engagement at BHP, said that co-designing the rules of engagement with the community is centre to what they do, acknowledging that previous agreements were shaped by a Western construct.

Today, it's moving away from that and, more importantly, ensuring staff and management within BHP have a high level of cultural knowledge and awareness.

"We've got various phases of different cultural awareness programs underway. From a 45-minute online course to actually spending a week on country with traditional owners," said James.

The programs are ongoing, not just a box-ticking exercise. "It's a continuum. It's not just what course you've done so you can call yourself competent," he added.

Jamie Lowe, panel chair and chief executive of the National Native Title Council, also believes cultural engagement is not enough. Companies should have a good relationship with Indigenous communities.

"You can't have engagement in a bad relationship, and you can't have a relationship without conversation. The first one you generally don't have a whole lot of choice in, so you make the best of it. But when a new relationship is going, it's got to be pretty intentional."

Having those conversations mean companies can avoid potentially disastrous environmental activities, including a tree-planting project in the wrong location.

"We would have been ploughing lines into a cultural heritage site. That risk was avoided by having traditional owners walk on site, which is a very practical example of a beyond-compliance approach," said Laura Osmetti, head community & social performance at Silva Capital.

Kado Muir, chair of National Native Council and former chair of First Nations Heritage Protection Alliance, said that existing sustainable frameworks provide the community with a negotiating tool - but that engagement is about finding a common ground and fully recognising First Nations rights.

"It would be great to reach a point where our contribution to the products that come off our land is recognised in value, where customers across the world would value knowing their minerals or energy came from Australia with First Nations cultural stewardship embedded in it."

FS Sustainability is a media partner of the 2026 RIAA Conference.

New data release by the Climate Bonds Initiative shows the green, social, sustainability and sustainability-linked bond market, collectively referred to as GSS+ has added almost US$6 trillion in issuance since 2020 alone. The market took 13 years, from 2006 to 2019, to reach its first US$1 trillion milestone.

Since 2021, annual growth has averaged around US$1 trillion a year, underscoring accelerating investor demand for climate and sustainability linked financing structures.

The Climate Bonds Initiative said the milestone demonstrated sustainable debt markets are now operating at institutional scale across regions, currencies and issuer types, even amid heightened geopolitical uncertainty and more volatile macroeconomic conditions.

Green bonds continue to dominate the market, with cumulative issuance now exceeding US$4 trillion. According to Climate Bonds Global State of Market 2025 report, green labelled bonds accounted for 64% of aligned GSS+ issuance last year, supported by strong demand for projects tied to clean energy, low carbon transport, green buildings and climate resilience infrastructure.

Europe remained the largest regional market in 2025, representing 45% of total aligned annual issuance, while more than 400 new issuers entered the sustainable debt market during the year.

The organisation said the rapid growth reflects increasing adoption of labelled debt instruments by governments, banks, corporate and development institutions seeking to fund the transition to lower carbon and more resilient economies.

Social and sustainability bonds have also continued to expand as investors broaden their focus beyond climate mitigation toward affordable housing, healthcare, education and inclusive growth initiatives.

Despite the sector's growth, Climate Bonds warned significantly more capital would still be required to finance the global transition, estimating around US$10 trillion annually will need to be mobilised to support climate resilient and low carbon economies.

The organisation said the next phase of growth would depend heavily on maintaining market integrity through stronger standards, clearer taxonomies and credible transition pathways.

"Sustainable debt is now operating at scale across regions, issuers, currencies, and use cases," Climate Bonds said.

"The next phase is about getting the right deals in place," they said.

The Built Different: Modern Methods of Construction report, compiled in partnership with Urbis, found MMC could cut construction times by 20% to 50% and reduce costs by around 20% when implemented at scale.

MMC includes prefabrication, off-site manufacturing, modular or volumetric building, 3D printing, robotics, and AI integration processes.

It comes as Australia is projecting a national shortfall of between 200,000 and 300,000 dwellings against the National Housing Accord target of 1.2 million new homes by 2029, the report said.

Average construction times have risen 40% since the pandemic and a new standalone home now takes 9.2 months to build, while a new apartment building takes close to two-and-a-half years.

Commenting, CEDA head of research Danika Adams said more buildings are required to meet Australia's housing needs, and a more efficient approach must take place to reach the target.

"The National Housing Accord target of 1.2 million new dwellings by 2029 is ambitious, and current progress is falling short," Adams said.

"Modular construction is currently used for less than 5% of new Australian homes. Given housing supply is constrained by how slow and expensive it has become to build, modern methods of construction offer a practical way to improve that.

"Traditional construction is not keeping up. These methods already exist, they work, and the challenge now is scaling."

The report found productivity has since deteriorated, with dwellings built per construction worker falling 40% since the 1970s.

Urbis partner Clinton Ostwald acknowledged the shortfall and stated better alignment will be critical to revitalising productivity in construction.

"We know this is a system-wide challenge, which means it also needs a system-wide response," Ostwald said.

"To scale modern methods of construction, we need better alignment across planning, regulation, procurement, finance and the supply chain so industry has the confidence to invest and deliver at scale."

Further, Adams said the report identifies barriers to implementation including fragmented regulation, inconsistent standards, financial constraints and workforce capability gaps.

"This is not a silver bullet, but with coordinated policy and united support from industry and government it is a tangible, scalable and evidence-based way to build more homes, faster and at lower cost," Adams said.

CEDA and Urbis encouraged governments to treat MMC as a central tool for unlocking housing supply at a time of critical national need.

As uncertainty around geopolitical risks and geoeconomic shocks heighten, asset owners and wealth managers must anticipate the potentially negative impact on assets, investments and economies, the annual Responsible Investment Association Australasia (RIAA) Conference held in Melbourne heard.

Speaking on a panel, Colonial First State (CFS) chief investment officer Jonathan Armitage warned geopolitical disruption is no longer episodic but a defining feature of today's investment landscape, with far-reaching implications for asset pricing and portfolio construction.

"There's this view that geopolitical events occur once in a while and are one-off scenarios. The events of the last five or six years have demonstrated that that is no longer true," he said.

What is happening now, Armitage explained, is a "magnification" of several forces - a confluence of events in the Middle East and other parts of the world, along with macroeconomic factors, such as the reversal of globalisation, volatile inflation and resource scarcity.

While this is not necessarily new, Armitage said it is a good reminder for investors that these are becoming part of the new investing landscape.

"It's less about thinking this is a one-off scenario with a relatively small probability of occurring. This is now almost the operating environment we have to invest in," he said.

What is inevitable is the rise in the cost of capital.

"That will feed through into bond markets [and] reflected in the way investors think about private assets and long-term investments, particularly in reassessing where it is considered safe to do business," he said.

The conflict proved that once historically stable environments, whether defined by geography or politics, are now less stable.

"One of the ramifications of what's happened in the Middle East is significant financial services development across the peninsula. I don't think anyone expected those areas to come under missile or drone attack. That was not a scenario many businesses setting up there had really thought through," he said.

Such developments underscore the need to incorporate geopolitical risk more systematically across both liquid and unlisted markets.

Despite these dynamics, Armitage said markets have yet to fully reflect the repricing required.

"I don't think you've necessarily seen that adjustment yet. I think the cost of capital is rising everywhere," he said.

"Do I think there will be an adjustment process over time? Yes, but I'm not entirely sure we're seeing that yet."

Armitage also flagged a growing disconnect between opportunity and risk, as investors seek exposure to markets being positively rerated despite the underlying geopolitical uncertainty.

This doesn't mean avoiding such investments opportunities, rather, finding ways to build protection and resilience around them. Diversification from a total portfolio perspective, he said, is one way.

Furthermore, investors should not ignore the speed at which assets respond to front-page news, whether on a data terminal or via the internet.

"We need to ensure that we're constructing portfolios that can absorb those very rapid developments," Armitage said.

FS Sustainability is a media partner of the 2026 RIAA Conference.

This week on The Greener Way, host Michelle Baltazar speaks with Emily DeMasi, regional team lead - North America EOS at Federated Hermes, about why human capital risks, such as workplace culture, harassment and violence, labour rights, and supply chain conditions, are financially material for investors through impacts on productivity, reputation and long-term returns.

DeMasi explains how stewardship engagement assesses human capital using employee surveys, whistleblower mechanisms, and core disclosure metrics such as workforce size (including gig and contract workers), turnover, demographics, and total workforce cost.

They discuss AI's double-edged impact, from efficiencies and training needs to job displacement anxiety and potential worker surveillance.

00:39 Why human capital matters

02:45 Workplace harassment as material risk

04:29 Do employee surveys work?

05:50 Investor engagement metrics

07:55 AI workforce disruption

11:13 Case studies

13:43 Best practice supply chain frameworks

16:18 Why stewardship is crucial

17:42 Looking ahead on AI and governance

We record on Gadigal Land and we pay our respects to the traditional custodians of country and elders past and present.

https://www.fssustainability.com.au/

Volkmer joins from Australian Retirement Trust and brings experience across climate strategy, stewardship and impact investing spanning both public and private markets, prior to joining ART, she spent seven years at Wellington Management leading sustainable investment initiatives.

The firm also appointed former TelstraSuper Investment Management executive Arthur Bengasino as head of investment solutions.

The hires comes as wealth managers face growing demand from affluent families for institutional style portfolio construction, broader access to private markets and more tailored sustainability strategies.

LGT Wealth Management chief investment officer Scott Haslem said the appointments reinforced the firms focus on deepening its investment expertise across both traditional and alternative asset classes.

Bengasino joins after eight years at TelstraSuper Investment Management, most recently serving as head of opportunities and real assets. He brings experience across private markets, including co-investments, secondaries and alternative assets, and will work with clients on portfolio structuring and implementation.

Volkmer joins from Australian Retirement Trust following seven years at Wellington Management, where she was director of sustainable investment. Her appointment reflects increasing client demand for sustainability integration and climate aware portfolio strategies across public and private markets.

The appointments form parts of broader expansion at the firm, which also added two senior family advisory specialists as wealthy families increasingly seek support that combines investment management with governance and succession planning.

LGT Wealth Management chief executive Michael Chisholm said ultra-high-net-worth clients are no longer treating investment management, family governance and succession as separate conversations.

"Portfolios are becoming more sophisticated, with greater exposure to private markets, while families simultaneously navigate more demanding governance structures and intergenerational transitions," Chisholm said.

The business is wholly owned by the LGT Group, which is backed by the Princely Family of Liechtenstein.

SA Power Networks is South Australia's electricity distribution service provider, as the issuance underscores its role in supporting the decarbonisation of the state while delivering an essential service to its customers and community.

ANZ acted as joint lead manager and sole green bond coordinator on the transaction.

The deal follows SA Power Networks' updated sustainable financing framework, which enables the alignment of sustainable finance instruments with the Australian Sustainable Finance Taxonomy.

Commenting, SA Power Networks chief financial officer Scott Gillen said the alignment is critical to achieve sustainable goals and long-term capital returns.

"I believe it is essential to align our financial goals with our environmental and social responsibilities to ensure long-term value creation for our customers, stakeholders, and the South Australian community," Gillen said.

"By aligning our financial strategy with our approach to sustainability, we can continue to help decarbonise our grid whilst achieving long-term financial success with appropriate returns for our owners and investors.

"We also recognise the growing importance investors place on environmental, social and governance integration within their capital allocation decisions."

Meanwhile, Australian Sustainable Finance Institute chief executive Kristy Graham added: "This deal demonstrates how the taxonomy can be applied in practice, and we hope it helps catalyse further market adoption of taxonomy-aligned sustainable finance in Australia."

"As the first issuer to confirm alignment with the taxonomy's voluntary environmental and social safeguard criteria, SA Power Networks has demonstrated how a high integrity approach can be applied within the Australian market.

"This continues the strong market momentum behind the Australian Sustainable Finance Taxonomy which we hope will continue to bring credibility, rigor and growth to the sustainable finance market in Australia."

ANZ head of global sustainable finance Katharine Tapley echoed both statements.

"We commend SA Power Networks for its leadership and ambition in setting a high bar for transparency and credibility in sustainable finance," Tapley said.

"We hope this transaction encourages greater adoption of taxonomy-aligned structures, helping to set a consistent standard for the market and support the continued growth of sustainable capital flows."

Proceeds from the transaction will be allocated to eligible new and existing distribution assets aligned with the technical screening criteria set out in the taxonomy, including projects that enhance bushfire preparedness and strengthen grid resilience and reliability, ANZ said.

Dries Lagerberg assumes his new role on June 1, having served as head of group sustainability regulations and commitments for the last three years.

Lagerberg joined Rabobank in 2000 as legal counsel based in Netherlands. He then moved to London in the same role before becoming head of the primary markets team, bringing him back to the Netherlands.

Lagerberg went on to other senior legal roles covering financial markets, retail banking and litigation.

In his new role, Lagerberg will lead the group sustainability department and report directly to Rabobank chief executive Stefaan Decraene.

Over the past three years, Lagerberg has been a member of Rabobank's group sustainability management team, helping to shape and advance the bank's sustainability ambitions.

He succeeds Aafke Keizer, who served in the post since 2022. She has now taken up a new but unnamed role within Rabobank.

"Sustainability is at the heart of Rabobank's cooperative identity. I look forward to continuing to work with colleagues and partners to accelerate our impact for members, clients, society, and future generations," said Lagerberg.

Separately, Rabobank recently joined the European banking consortium Qivalis to help develop a regulated, Euro-denominated stablecoin for on-chain payments and settlements.

The Qivalis consortium now comprises 37 financial institutions across 15 European countries, aiming to progress and scale the secure and scalable digital financial infrastructure for banks operating in the region.

Qivalis wants to launch the stablecoin that is fully backed with fiat currency and designed in line with the European Markets in Crypto-Assets Regulation (MiCA), under the planned supervision of De Nederlandsche Bank.

The group is currently pursuing authorisation as an Electronic Money Institution and plans a market launch in the second half of 2026.

Schroders Greencoat took over APF Energy from SWEN Capital Partners via its direct impact strategy, SWEN Impact Fund for Transition, and APF BV.

APF Energy provides energy that can be used as a direct substitute for natural gas by producing biomethane from agricultural manure and food by-products.

APF Energy operates brownfield biogas plants. It comprises six assets, including three fully operational sites and three at construction stage, plus a late-stage pipeline. These generate biomethane from a feedstock mix of agriculture manure and food by-products, addressing nitrate challenges associated with the Netherlands' livestock industry.

Schroders Greencoat said the country's high volume of agricultural feedstock, combined with one of the densest gas distribution networks in Europe, makes it a particularly attractive market for biomethane development.

Paris-based SWEN Capital Partners operates in private markets, specialising in private equity, unlisted infrastructure and private debt.

SWEN Capital Partners managing director François Pasquier and principal Grégoire Allemandou said: "Schroders Greencoat's deep expertise in bioenergy and energy transition infrastructure makes them the great partner to take the platform to its next stage of growth. We are also particularly pleased that this transaction marks the first exit from our second vintage, SWEN Impact Fund for transition 2 (SWIFT 2), reflecting our strategy of backing high-quality platforms in the renewable molecules sector."

Schroders Capital global head of infrastructure Minal Patel said biomethane has an increasingly important role to play in the European energy transition, particularly in sectors where other low-carbon solutions are less readily available.

"The Netherlands is one of the more advanced markets due to its mature regulatory framework, strong policy support for renewable gas and well-established infrastructure. This platform gives us a strong foothold from which to apply the expertise we have built across our bioenergy portfolio," Patel said.

Bergsma reflects on his the last two decades in the sector and describes how capital raising has evolved from needing to explain basic technologies to today's dedicated institutional infrastructure teams, alongside greater competition.

He explains clean energy investments across solar, onshore/offshore wind and battery storage that appeal to Nuveen's institutional clients.

He also highlights what's new in the battery storage sector and Australia's land-driven scale advantages versus Europe.

For investors just entering the clean energy sector, he explains the need to address China-concentrated supply chains and Australia's grid buildout needs.

01:02 A career milestone in clean energy

02:13 Capital raising outlook

03:09 Nuveen infrastructure strategy

04:43 Geopolitics and energy security

06:47 Data centres and demand surge

08:41 Risk return spectrum explained

09:45 Australian investor appetite

10:54 Nuveen's local pipeline

12:04 Ten-year outlook on batteries

14:40 What could go wrong?

We record on Gadigal land and we pay our respects to the traditional custodians of country and elders past and present.

https://www.fssustainability.com.au/

Minderoo is backed by Andrew and Nicola Forrest's private investment group Tattarang.

The consortium will produce applied research, shared datasets, and market-building infrastructure to support investors, policymakers and practitioners.

It will focus on continued delivery of Australia's largest annual impact investing benchmarking study, in partnership with Impact Investing Australia.

The research agenda includes democratising access to impact capital including place-based and First Nations capital models, intergenerational wealth transfer for family offices and philanthropic capital mobilisation as well as accelerating financing of affordable housing.

Minderoo Foundation chief executive John Hartman said philanthropy has a clear role to play in building Australia's impact investing market.

"By backing the Asia Pacific Impact Investing Research Consortium, Minderoo Foundation is supporting the evidence, standards and coordination needed to move more capital into areas where it can have real impact, including social and affordable housing and place-based initiatives," Hartman said.

UNSW said the consortium represents a new model of collaboration between academia and industry - bringing together leading researchers, philanthropic organisations, and financial institutions to co-design and deliver rigorous, practice-informed research.

UNSW Centre for Social Impact director and co-lead of the consortium Professor Danielle Logue said the initiative is designed to meet impact investing needs by embedding academic rigour within real-world market dynamics.

"What is different about this consortium is how we work. By partnering directly with industry and philanthropic leaders such as Minderoo and UBS, we are co-creating research that is both academically rigorous and immediately relevant to capital allocation decisions," Logue said.

"This model ensures independence and integrity through UNSW's research standards, while grounding our work in the realities of how capital actually flows. It allows us to build the evidence base and market infrastructure the sector now needs to scale responsibly."

The consortium will operate as a collaborative platform, working across sectors to strengthen the effectiveness, credibility and growth of impact investing in Australia and the wider Asia Pacific region.

UBS Global Wealth Management Australia head of not-for-profit segment Zarmeen Pavri said: "This structure will ensure that stakeholders explore innovative ways to deploy funding across the full spectrum - from philanthropic grant making through to patient, catalytic and commercial capital. We do this with the end goal that resources reach the opportunities with the greatest potential for measurable impact."

The fund, now registered for sale to wholesale investors and adviser clients in Australia, combines fundamental global equity investing with ESG integration through a proprietary framework incorporating stewardship insights from Federation Hermes's EOS engagement business.

The launch marks Federated Hermes' second wholesale fund introduced to the Australian market this year, following the February rollout of its Global Trade Finance Fund. The firm already has a sizeable institutional footprint locally though its stewardship arm, EOS at Federated Hermes, which advises on approximately US$2.3 trillion (AU$3.38 trillion) in assets globally. This includes mandates linked to several of Australia's largest superannuation funds.

Benchmarking against MSCI World ex Australia Index, the strategy will typically hold between 250 and 500 stocks selected through a systematic and data driven investment process supported by fundamental oversight from the portfolio management team.

The strategy also integrates a proprietary ESG framework incorporating engagement insights from EOS, alongside Federated Hermes; multi factor risk model, MultiFRAME, which is used to manage portfolio risk and balance exposures across the portfolio.

Geir Lode, who leads the global equities team and serves a lead portfolio manager for the strategy, said heightened macroeconomic volatility continues to create opportunities across global markets.

"Our disciplined, risk aware approach aims to identify resilient businesses that look attractive across multiple dimensions and avoid material weaknesses, while controlling risk and maintaining balanced exposures," Lode said.

The strategy has been managed since 2007 and oversees approximately US $5.8 billion in assets globally.

Associate director of business development Liz White said the launch reflects growing demand among Australian wholesale investors for broader global diversification beyond domestic equities.

The initiative, led by the CapitaLand Hope Foundation (CHF), will support 12 grantee organisations across China, India, Singapore and Vietnam.

The latest funding round includes an initial S$3.5 million (AU$3.8m) allocation alongside a newly introduced Outcomes Achievement Fund, which will provide additional funding to grantees that successfully deliver predefined social impact outcomes.

The announcement was made at the Philanthropy Asia Summit 2026, where the foundation hosted discussions on outcome driven philanthropy and long-term investment in children and youth.

CapitaLand chief corporate officer Tony Tan said the initiative reflected the organisations commitment to building resilient communities through long-term investment in younger generations.

"At CHF, we believe that investing in children and youth is one of the most powerful ways to build resilient communities," said Tan.

The second edition of CCRI expands on the inaugural 2025 program, which distributed S$3.4 million (AU$3.7m) to 12 non-profit organizations. While the initial program focused primarily on identifying and funding high potential organisations, the 2026 initiative adopts a broader ecosystem approach aimed at strengthening operational capabilities and improving collaboration across the social investment sector.

As part of the expanded framework, CapitaLand has deepened partnerships with AVPN and Philanthropy Asia Alliance.

AVPN will assist with grantee selection, due diligence, impact monitoring and cross regional learning programs, while Philanthropy Asia Alliance will help identify organisations with demonstrated philanthropic networks to scale successful initiatives.

CapitaLand said the revised structure is designed to strengthen accountability and improve long term social outcomes by linking funding more directly to measurable impact delivery.

Julia Leske has been promoted to head of sustainability business, APAC, which is a newly-created role reporting to the group's global head of sustainability business, Till Jung. Prior to the appointment, Leske was managing director, senior consultant sustainability strategy.

"Julia brings deep regional insight and a strong strategic lens at a time when investors are looking for clarity and consistency in how sustainability frameworks are applied," said Jung in a company statement.

"Her experience navigating the many market and regional nuances, coupled with her command of global sustainability industry developments, will greatly benefit our clients' ability to turn responsible investing into action."

Leske said the role builds on her existing responsibilities and focuses on setting clear direction for the application of sustainability frameworks in the region.

"I'm looking forward to collaborating with clients, colleagues and industry peers as strategic and practical challenges test assumptions and sharpen our thinking," she said.

Leske joined ISS STOXX with the 2019 acquisition of Canberra-based CAER, where she served as CEO. In December last year, she joined the board of the Responsible Investment Association Australasia (RIAA).

ISS STOXX Sustainability provides climate data, analytics, and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. The group's sustainability solutions also cover corporate and country research and ratings.

Rainmaker Group, publisher of FS Sustainability, is part of ISS STOXX.

Speaking at the Queensland Futures Institute Finance Summit, chief executive Kate Farrar said the fund had already committed to $225 million under the strategy, which was launched to direct more members' retirement savings back into the Queensland economy by 2029.

Farrar said Queensland's population growth, infrastructure pipeline and expanding innovation economy were creating attractive long-term investment opportunities, particularly ahead of the 2032 Summer Olympics.

The strategy builds on more than $1 billion already invested in the state and reflects the fund's focus on supporting local economic growth while delivering returns for members.

Brighter Super, which manages $37 billion on behalf of more than 340,000 members, said it is now the third largest non-government financial institution headquartered in Queensland.

"We have seen a decline in locally headquartered financial capability, raising an important question about who will continue backing Queensland into the future," Farrar said.

The fund's investments to date include a $100 million allocation to Queensland industrial and logistics real estate assets through Barings, focused on southeast Queensland and regional hubs.

It also committed $75 million to the Queensland Regional Agriculture and Food Trust managed by Riparian, targeting regional producers, water assets and agricultural and infrastructure.

Another $50 million partnership with QIC is backing high-growth Queensland businesses across advanced manufacturing, agtech, aerospace and technology.

The QIC portfolio includes investments in Queensland based companies including Gilmour, Space Technologies, SwarmFarm Robotics, Future Maintenance Technologies and ProcurePro.

Farrar said future investment would continue to be assessed against the same return, risk and cost hurdles applied across the broader portfolio.

Shareholders have requested the resolution, coordinated by Market Forces, be included for consideration at Macquarie's annual general meeting (AGM) to be held on July 23.

Australian Ethical is part of the 160 shareholders on the resolution.

Last year, 35% of shareholders voted for improved climate risk exposure and management.

In its annual report published earlier this month, Macquarie said while it remains committed to the goals of the Paris Accord, its longstanding view remains that a managed "glidepath" to energy transition is the only long-term solution to manage "availability, affordability, and emissions reduction".

"High energy costs, and the accompanying impact on the cost of living, have seen a shift in public policy priorities and greater recognition in recent years that fossil fuels, particularly natural gas, will be required for some time, even as the transition to renewables continues," Macquarie said.

The World Benchmarking Alliance (WBC) gives Macquarie Group an ACT (assessing low-carbon transition) core rating of "D" - unstructured plan execution.

The score indicates that while Macquarie has sufficiently detailed transition planning covering the most material sources of the company's emissions, it does not provide evidence that it is influencing suppliers and investors to reduce upstream greenhouse gas (GHG) emissions.

WBC said if firms disclosed further information on investments and "consistent emissions time series that demonstrate significant emissions reductions", it would move the company to a higher total score.

Shareholders claim the latest disclosures and financing activity appears inconsistent with accepted science-based pathways to meet the Paris climate goals, substantially decrease reported green-energy exposure, and significantly increase reported fossil fuel exposure.

The resolution stated these developments "call into question the credibility of Macquarie's climate representations and exposes the group to growing climate-related financial risks."

To meet public commitments, the resolution said Macquarie must disclose a clear approach to ensuring its fossil fuel financing activity is consistent with the Paris climate goals.

"MQG appears to be reducing its contribution to the energy transition by retreating from direct green energy investment, which fell 65% over two years to just $700 million in FY26," the resolution read.

Macquarie also said in its annual report climate-related opportunities are not expected to be material in the short-term.

"Over the medium- to long-term, opportunities may emerge; however, these are contingent on a range of external factors, including investor demand and market conditions," Macquarie said.

It added in the long-term the range of possible outcomes become increasingly broad and estimating the financial effects beyond the medium-term "would not be decision-useful".

The report, Resilience at Risk: Understanding Climate and Nature Risk Exposures in Investment Portfolios, was developed by the ISS STOXX research institute over 12 months and draws on interviews with more than 20 global investigators and market participants.

Using the firms Biodiversity Impact Assessment Tool and climate risk analytics, the research found nature related risks are already financially material across investment portfolios.

In one test portfolio, more than 55% of portfolio revenue was found to rely on ecosystem services such as freshwater access and raw materials, underscoring the extent to environmental degradation and resource scarcity.

The report also found biodiversity impacts are heavily concentrated upstream in supply chains. More then 99% of biodiversity related impacts in the test portfolio stemmed from land transformation and land occupation linked to commodities including palm oil, timber and rubber.

Water related risks emerged as a major climate and nature nexus issue.

An asset level assessment of 306 farm assets identified water stress, flooding and wildfires as the primary climate hazards affecting financial performance. Under a high emissions scenario, the proportion of farm assets facing medium water stress exposure is projected to rise from 11% to 57% by 2050, with high-risk exposure also increasing sharply.

The report argued investors risk understating portfolio vulnerabilities if climate and biodiversity risks are analysed in isolation, warning fragmented assessments can obscure emerging nonlinear risks and supply chain disruptions.

ISS STOXX Research Institute managing director and global head Mirtha Kastrapeli said nature related risks were no longer theoretical or distant concerns.

"Climate and nature risks are no longer abstract or long-dated, they are already shaping financial outcomes," said Kastrapeli.

She said integrating climate hazards, ecosystems dependencies and biodiversity impacts into a single analytical framework would better position investors to stress test portfolios and identify resilient assets in an increasingly resource constrained environment.

Financial Standard is owned by ISS Market Intelligence, which is part of ISS STOXX.

Echoes of the 1970s: Energy shocks, security and ESG

The US-Iran conflict has triggered a 1970s-style energy shock, with energy security taking precedence over climate and health objectives in the near term. Longer term, it reinforces the case for renewables, electrification and greater domestic resilience.

As is widely reported, the impact of the Middle Eastern conflict is far-reaching, with first-round impacts causing price rises across multiple commodities and transport channels. These effects include higher prices for oil and gas, fertilisers and freight, which flow through to food, manufactured goods, and construction inputs across the economy.

Market focus has been on inflationary pressures and asset-price implications. Less immediately visible, but equally important, are the ESG implications that may persist long after supply routes normalise.

Environmental factors

The immediate environmental damage arises from missile attacks on oil, gas and transport infrastructure, increasing pollution risks and military-related emissions. More enduring, however, is the energy price shock and resulting reliance on fossil fuels driven by security concerns.

Increased demand for coal: A short-term impact

With around 20% of global liquefied natural gas (LNG) trade normally passing through the Strait of Hormuz, attacks on regional gas fields have pushed gas prices higher and increased coal demand in power generation.

No country has formally extended coal terminal operations because of the conflict, but higher demand has lifted coal exports and utilisation in Australia, Indonesia and South Africa. While the conflict strengthens the case for renewables, it may also delay coal terminal closures where rollout has been slower than expected.

An accelerated rollout of renewables in the medium term

Unlike past oil shocks, this conflict is unfolding when solar, wind and battery technologies are already cost-competitive. Energy security concerns are still likely to accelerate investment in renewables, storage, and electrification, as Europe's post-Ukraine response showed.

That trend appears to be continuing. European Union policymakers are reassessing oil and gas dependence and considering more renewables, storage, and nuclear capacity, while China has called for faster renewable deployment and larger energy reserves. In Australia, the federal government has created a National Fuel Supply Taskforce to address energy security risks.

Transportation

As petrol prices rise, households have responded through behavioural responses such as greater working-from-home adoption, carpooling and public transport use, with regional rail demand reportedly lifting.

The appeal of electric vehicles (EVs) is also likely to increase, particularly where households can charge using rooftop solar. The prospect of fuel rationing could shift preferences further.

This shock has clear parallels with the oil crises of the 1970s, triggered by the Organization of the Petroleum Exporting Countries (OPEC) embargo and the Iranian Revolution. Then, oil prices rose by around 400%, supply was rationed, and consumers shifted to smaller, more fuel-efficient vehicles, carpooling and public transport. The period also favoured Japanese manufacturers over larger domestic models such as the Holden Kingswood and Ford Falcon. Today, lower-cost EV manufacturers may benefit.

While EVs were not viable in the 1970s, the argument now extends beyond emissions reduction to energy sovereignty. In the 1970s, Australia produced around 60-70% of its oil, limiting exposure to global shocks. Today, domestic production has fallen sharply and Australia imports around 85-90% of refined fuels, reflecting depletion, refinery closures and a long policy focus on export-oriented coal and liquefied natural gas (LNG) rather than domestic oil security.

Social impacts

Fuel standards rollback: Reversing recently addressed health risks

Burning higher-sulphur petrol raises emissions associated with asthma, lung cancer, chronic respiratory disease, cardiovascular disease and stroke.

Australia tightened fuel standards in mid-December 2025 to align with Europe, the US and Japan. The temporary rollback has allowed output from the Ampol Lytton refinery in Brisbane to remain in Australia rather than be exported, easing near-term supply constraints but increasing local pollution and health risks.

Energy, fertiliser and food prices: A social risk

Around one-third of global urea production originates in the Gulf region and transits the Strait of Hormuz. Because urea is critical for fertiliser production, any disruption quickly feeds through to reduced availability, higher farm input costs and, ultimately, higher food prices.

This is especially relevant for Australia, which imports a large share of its urea from the Gulf, with the disruption occurring just ahead of the April-to-June winter-cropping window.

Energy and food price shocks hit vulnerable households hardest because lower-income consumers spend a greater percentage of their finances on essentials. While Australia has stronger safety nets than many countries, sustained increases in fuel and grocery prices still erode real incomes, particularly in regional areas. Elsewhere, the same pressures can contribute to food insecurity and social unrest.

Governance issues

Energy security as a governance risk

As at 28 March 2026, Australia held approximately 28 days of petrol, 21 days of jet fuel and 26 days of diesel in storage (see Figure 1), which is well below international benchmarks of 90 days.

This highlights dependence on imported refined fuels, limited domestic buffers and reactive rather than embedded resilience. While the federal government has coordinated supply and market stabilisation, the episode raises broader questions about preparedness and the strength of Australia's energy security framework under prolonged disruption.

The argument for defence spending

The US-Iran conflict underscores how national security increasingly intersects with the governance and social pillars of ESG. Effective defence capability underpins national stability, protection of critical infrastructure and governments' ability to manage shocks affecting households, supply chains and energy security.

As a result, defence spending is increasingly being viewed as part of responsible governance, centred on resilience and civilian protection rather than military ambition alone.

Conclusion

While markets remain focused on inflation, growth and asset-price implications, the conflict is also influencing ESG outcomes for investors in less-immediate but equally important ways. In the short term, energy security concerns have driven pragmatic responses that sit uneasily with climate objectives. At the same time, the shock has reinforced the longer-term case for EVs, renewables, electrification and reduced reliance on imported fuels.

Within our fixed income portfolios, we remain cautious on issuers with an over-reliance on fossil fuels, which has contributed to more defensive portfolio positioning in the current environment. Companies that are further advanced along their decarbonisation pathways should be better placed to navigate the headwinds of the current crisis. We also continue to seek selective investment opportunities in renewable energy where they align with portfolio objectives.

Rest is the largest investor in renewable energy infrastructure manager Quinbrook's Net Zero Power Fund (NZPF).

Rest invested US$650 million in Quinbrook in 2023 in a bid to benefit from decarbonisation and digitalisation over the long term. This includes solar and battery projects and renewable-energy supported data centres.

In April, Quinbrook announced Blackstone-affiliated funds acquired a "significant minority stake" in Rowan Digital Infrastructure but did not disclose any details of this value. Rowan develops hyperscale data centre campuses and has about 20 sites in the US.

Rest is an investor in Rowan through the NZPF and an associated co-investment vehicle.

"We believe our members will continue to benefit over the longer-term from our ongoing stake in Rowan, as well as Quinbrook's strong return profile overall. We expect this investment will help our members grow their super while contributing to a more sustainable future," Rest head of real assets for investments Andrew Bambrook said.

He added Blackstone's investment will support Rowan's future development pipeline and ongoing capacity expansion and has delivered a strong initial return for Rest's members.

"Most of our members will not retire for many decades and we think deeply about the world they'll retire into. We have a long-term objective to achieve a net zero carbon footprint for Rest by 2050," said Bambrook.

"We have identified decarbonisation and digitalisation as two of the major forces that will shape the global economy and society over the coming decades, while also creating valuable long-term investment returns for our more than two million members."

David Scaysbrook, managing partner at Quinbrook, said: "We're focused on developing power and infrastructure solutions that solve hyperscale operators' urgent need for more compute capacity at scale."

"We established Rowan as an early mover in gaining access to power, which is now driving global data centre development. This power focus leverages Quinbrook's specialist expertise in power project development tailored to the needs of energy intensive customers."

Arkeus is used by the Australian Army and US Department of Defense, also known as the US Department of War, to "detect and track threats in real time" via an artificial intelligence (AI) sensing system that serve as the "eyes and brains" of machinery such as drones.

QIC Ventures, together with R+ VC, Folklore Ventures and Dyne Ventures, Main Sequence Ventures, Salus Ventures and Beaten Zone, are part of the Series A fundraise.

Locally, Arkeus is providing technology for the Australian Army Wide Area Airborne Surveillance Program, which heightens sensing capabilities of its Tactical UAS fleet.

It has also won contracts with the US Department of War following competitive evaluations against US incumbents.

Arkeus' sensing systems is said to detect targets up to eight times further than existing optical systems in degraded visual conditions, when compared to US Department of Defense competitive evaluation.

The money will enable Arkeus to move quickly as defence forces shift toward autonomous, sensor-driven operations, according to its co-founder and chief executive Simon Olsen.

"Modern defence is moving toward systems that can operate and make decisions in real time, without relying on constant human input or vulnerable data links," Olsen said.

"We've built Arkeus from the ground up for that environment. Our systems process and interpret data on the platform itself, allowing autonomous systems to act in real time without relying on vulnerable communications links."

Arkeus recently moved operations from Victoria to Queensland.

Queensland's premier David Crisafulli credited his government for the move, saying the deal strengthens the state's position as a national leader in defence.

QIC Ventures investment director Nick Capell said a key component of the deal is the establishment of a Queensland-based manufacturing and sustainment facility, alongside a local team supporting the Australian Defence customers in the region.

Olsen commented: "Queensland gives us the ability to attract and retain the people we need to build globally competitive technology here in Australia, and the support from QIC and the Queensland Government has been an important part of this decision."

In early observations released ahead of the 30 June 2026 reporting season, ASIC said the overall standard of climate related reporting has improved significantly compared to previous voluntary disclosures, with the new mandatory framework delivering greater consistency, comparability and depth of information for investors.

The regulator reviewed a subset of sustainability reports lodged by Group One entities, the first cohort required to comply with mandatory climate reporting obligations under Chapter 2M of the corporations Act and AASB S2 Climate related Disclosures.

As of 6 May 2026, ASIC had received 259 sustainability reports tied to the December 2025 reporting period, including 34 from listed entities and 225 from unlisted groups. Mining related business construction and manufacturing firms, financial services groups, oil and gas companies and energy providers accounted for the largest share of lodgements.

While ASIC welcomed the effort made by reporting entities, it identified several areas where disclosures fell short of regulators expectations.

The regulator said some entities included disclaimers either within or near sustainability reports stating investors should not rely on the disclaiming responsibility for the accuracy of certain disclosures. ASIC warned such statements conflict with the statutory objectives of the regime and risk misleading users.

ASIC also identified instances where companies previously impacted by extreme weather events had not adequately disclosed similar climate related risks or mitigation strategies in forward looking sustainability reporting, despite those risks already appearing in financial statements or ASX announcements.

The regulator further pointed to inconsistent disclosure of assumptions, judgment calls and estimation uncertainty, warning that investors should not be left to infer why particular methodologies or proportionality mechanisms were adopted under ASSB S2.

ASIC also observed varied interpretations of what constitutes a "climate related target", particularly regarding legally mandated emissions obligations such as the Safeguard Mechanism.

Looking ahead, ASIC said its 2026 to 2027 surveillance program will focus on financial reporting areas involving significant judgement, including revenue recognition, asset impairment and financial instrument valuations, while also reviewing decommissioning and site restoration provisions.

ASIC Commissioner Kate O'Rourke said high quality reporting remained critical to market transparency and informed investment decisions.

"Our surveillance programs reinforce the importance of high-quality reporting and audit," O'Rourke said.

"Reliable financial information is critical to transparency in Australia's capital markets and informed investment decisions by investors."

Effective July 1, the super fund's negative screens will allow the portion of reported revenue a company may derive from conventional weapons systems and components to be up to 5%, instead of up to 1% currently, for the Sustainable Balanced, Sustainable High Growth, and Global Environmental Opportunities options.

The negative screen will also no longer consider reported revenue derived from weapon support systems (for example, software and/or telecommunication systems and services).

"As at the date of this 'Important product changes' notice all other negative screens are unchanged across these three sustainable and environmental branded investment options," UniSuper said.

"UniSuper continues to screen companies with any reported revenue from the manufacture of whole weapon systems or components developed for exclusive use of controversial and/or nuclear weapons."

Meanwhile, the super fund also changed the investment strategy for Global Companies in Asia option with the addition of developed and emerging Asian economies.

"To invest in a portfolio of global securities (including but not limited to international shares) which may include Australian shares and securities that seeks to take advantage of the expected growth in Asian economies by investing in well-established global companies," the super fund said.

Its approach to screening for the Australina Bond and Australian Income investment options has also been updated to exclude companies with any reported revenue from the production of tobacco, manufacture of nicotine alternatives and tobacco-based products, excluding the supply of key products necessary for the manufacture of tobacco or nicotine products.

Further, as a result of "prevailing market circumstances", both the High Growth and Sustainable High Growth options have diverted concentration towards cash and fixed interest, allocating a 5% holding into cash and fixed interest from the zero-exposure prior.

The High Growth option has also reduced holdings in Australian (40% to 38%) and international shares (52% to 51%), while the Sustainable High Growth option increased international shares exposure (56% to 57%) but reduced domestic equities drastically (38% to 34%).

In a decision published on 16 May 2026, Justice Mount said parts of the Guardians' Statement of Investment Policies, Standards & Procedures and its Sustainable Investment Framework were "materially less clear and specific than the previous iterations" and "framed in such general terms as to provide no practical benchmark for those applying them in relation to alleged breaches of human rights standards."

Guardians general manager of corporate affairs Cristina Billett said Guardians accepted that its policies need more specificity and would be amending them accordingly.

"Our mandate requires us to manage the Super Fund in a manner consistent with, among other things, avoiding prejudice to New Zealand's reputation as a responsible member of the world community, and our investment policies are designed to ensure we achieve that objective," Billett said.

"We accept Justice Mount's finding that it is important we not only adhere to and comply with our sustainable investment policies, but that the standards and procedures underlying those policies must be identified more clearly in our policy documents.

With that in mind, we are now working on how we can reformulate those documents to ensure they satisfy that condition."

Billett said the court decision focused on the way the Guardians' policy documents described the Guardians' sustainable investment decision-making processes.

NZ Super said updates to the policy documents in recent years had not, however, materially changed the Guardians' actual engagement and exclusion practices.

The policy changes come after New Zealand's High Court ruled against the nation's super fund in April, finding some of its policies are "unreasonable and unlawful" in regards to how it treats companies accused of human rights breaches.

The Palestine Solidarity Network Aotearoa (PSNA) issued judicial review proceedings against NZ Super Fund for its failure to divest from Israeli companies that have been deemed by the United Nations to be complicit in the Israeli occupation of Occupied Palestinian Territory (OTP). It asked the High Court to review the fund's policies in relation to ethical investments.

The complaint related to holdings in Airbnb, Booking.com, Expedia, and Motorola. Collectively, NZ Super has about $155 million of its $75 billion invested in them.

The PSNA had been calling for NZ Super to divest the companies for some time prior to filing for judicial review, having had success against the fund in 2021 when it divested five Israeli banks due to risks they were materially contributing to human rights breaches.

In a judgment released this morning, the High Court found: "The Guardian's policies fail to meet the basic requirements of the Act (New Zealand Superannuation and Retirement Income Act 2001) so far as exclusion from the fund for alleged breach of human rights standards is concerned. They are unreasonable and unlawful."

Speaking in Sydney, Snelgrove said infrastructure investment was being driven by five simultaneous long-term forces; technology, decarbonisation, aging assets, population growth and emerging markets.

"These are trillion-dollar investment programs," he said.

"What's underpinning our outlook is that these things are happening regardless of geopolitics, trade wars or economic cycles," said Snelgrove.

He went on to say that AI adoption was accelerating demand for infrastructure in ways many investors still underestimated, particularly through the explosive growth of data centres.

Global data centre energy consumption is expected to almost double from 485 terawatt hours in 2025 to around 1000 terawatt hours by 2030. That's roughly the equivalent to Japan's current electricity consumption.

"The AI story doesn't work without infrastructure," he said.

The challenge, however, is not simply generating power but connecting it to already strained electricity grids. Snelgrove noted around 3000 gigawatts of power capacity additions globally are currently waiting for grid access approvals, highlighting what he described as a major bottleneck and investment opportunity,

Beyond AI, Snelgrove said ageing infrastructure across developed economies was becoming an increasing urgent issue.

In the UK, roughly 20% of water supply is lost daily through leaks, while the US more than 75,000 bridges have exceeded their intended lifespan.

"These are real world problems government and regulators are being forced to solve," he said.

Snelgrove also pointed to rising middle class populations in emerging markets as a key driver of long-term infrastructure demand, particularly in countries such as India where energy consumption is expanding rapidly.

"Every 18 months India is effectively adding Australia's entire electricity demand", he said.

He said the combination of regulated cash flows, long duration investment pipelines and structural demand growth was shifting listed infrastructure beyond its traditional reputation as a defensive yield allocation.

"We view it as one of the strongest asset classes from a long-term outlook perspective," he said.

Both investments are conducted with the Regnan Credit Impact Trust and Pendal Sustainable Australian Fixed Interest Fund.

The investment in ANZ's Sustainable Development Goals (SDG) Bond 2031, which allocates proceeds toward a diversified portfolio of social and environmental lending activities aligned with the United Nations SDGs, will be used to fund or refinance eligible assets with "strong emphasis" on climate action, sustainable cities, clean energy and positive social outcomes.

With approximately 80% of proceeds allocated to environmental activities and 20% to social outcomes, around two thirds of funding have been directed to projects based in Australia, Pendal said.

The bond supports financing of more than 360 large scale renewable energy projects, including wind farms, solar projects and battery energy storage systems (BESS) across Australia, India, Hong Kong and other regions.

This includes the construction and operation of the 252-megawatt (MW) Wambo Stage I and 254 MW Wambo Stage II wind farms in south-east Queensland.

Meanwhile, the bond also contributed to the operation of specialist disability accommodation across Australia, comprising nearly 1000 beds, and a further 106 specialist disability accommodation homes with around 350 beds.

The bond has also supported the delivery of more than 1200 dwellings to be used as social and affordable housing.

Pendal said the investment allow investors to direct capital toward a wide range of activities that support climate stability, social inclusion and sustainable economic development.

Meantime, the investment in MTR Corporation's green bond provides exposure to the finances of eligible green investments under MTR's Sustainable Finance Framework, with proceeds expected to support a range of climate-aligned projects, the firm said.

This includes major rail line extensions in Hong Kong, station energy-efficiency upgrades, low-carbon building improvements, renewable energy installations, biodiversity and conservation initiatives, and climate-resilience works.

There are several near-term projects that will be funded through the issuance, including rail expansion programs in new growth districts, replacement of older rolling stock and equipment with efficient alternatives, and upgrades to station infrastructure reducing operational energy use.

The bond may also finance enhancements to MTR's extensive property portfolio, where the company is targeting substantial reductions in scope 1 and 2 emissions intensity by 2030, as well as water and waste-management improvements across its network, Pendal said.

These projects contribute to MTR's science-based targets, which include reducing well-to-wheel rail transport emissions by 46.2% per passenger-kilometre by 2030 and achieving carbon neutrality by 2050.

Announced in September 2025, the Cleaner Fuels Program is a key part to help building fuel resilience while reducing emissions in hard-to-abate transport sectors such as aviation, ARENA said.

ARENA chief executive Darren Miller said this program is an important step in supporting Australia's transition to net zero while strengthening fuel resilience.

"Australia is well-positioned to become a key producer of low carbon liquid fuels, backed by our renewable resources and innovation capability. Through this program, ARENA will support advanced projects that could lead to fuel production, helping to lower emissions and build Australia's resilience to fuel shocks", Miller said.

The Cleaner Fuels Program will provide production-linked incentives over 10 years and target support toward LCLF projects that are likely to reach production soon.

Simultaneously, ARENA has also announced the shortlisted projects for Round 2 of the Hydrogen Headstart Program, following the revised funding allocated to the program to $1 billion in the 2026 Federal Budget.

ARENA will now invite shortlisted projects to submit full applications, which includes a rigorous assessment process and detailed due diligence, and only those that meet a high merit threshold will be considered for funding.

Miller said the level of engagement in Round 2 of Hydrogen Headstart demonstrates that industry remains committed to building a renewable hydrogen sector in Australia.

"Renewable hydrogen presents Australia with a significant economic and decarbonisation opportunity. Its potential to develop low-emission fuels for aviation and shipping, as well as key inputs for fertiliser could also help improve the nation's energy resilience in the longer term," he said.

"Renewable hydrogen is a complex, capital-intensive industry and progress takes time, but it is a critical enabler of industrial decarbonisation, particularly for hard-to-abate sectors. What we're seeing are expressions of interest that are considered and well aligned to future market demand."

Shortlisted applicants have until early September 2026 to submit their full application.

The shortlisted applicants were Bell Bay Powerfuels; European Energy Australia; HAMR Energy; HIF Asia Pacific; Murchison Hydrogen Renewables; Perdaman Commercial Developments; and Summit Hydro.