Australian Update

Australia Commits AU$75 million to Singapore's FAST-P Clean Energy Transition Initiative

On 3 December 2024, the Australian Government approved an AU$75 million equity investment in the Singapore Government's Financing Asia's Transition Partnership (FAST-P) initiative. This investment is the first under the AU$2 billion Southeast Asia Investment Financing Facility (SEAIFF) announced at the ASEAN-Australia Special Summit in March this year.

FAST-P is a blended finance initiative to support the region's clean energy transition launched by the Monetary Authority of Singapore at COP28 in 2023. It aims to bring together international public, private and philanthropic partners to support climate resilience. The Singapore Government will pledge up to US$500 million as concessional capital, matching concessional capital from other partners, for decarbonisation projects and sustainable infrastructure across Asia. 

Australia's investment will be through the Green Investments Partnership (GIP) component of FAST-P, which focuses on supporting green infrastructure projects critical for the region's transition to cleaner energy, but which have been traditionally labelled as high-risk or marginally bankable. GIP projects will include renewable energy, energy storage, electric vehicle infrastructure, sustainable transport and water and waste management.

The SEAIFF forms part of Australia's broader strategy to deepen economic engagement with Southeast Asia by providing loans, equity and guarantees for infrastructure, energy and sustainable development projects in the region. By financing critical initiatives, the aim is to create commercial opportunities for Australian exporters and financial institutions, strengthen diplomatic ties and assist the region's transition to cleaner energy.

Australian Institute of Company Directors Encourages Good Governance on Cyber Threats with Updated Guidance 

The Australian Institute of Company Directors (AICD) has updated its Cyber Security Governance Principles (Principles) in response to the new Cyber Security Act 2024 (Cth) passed in November. The updates highlight the fast-evolving cyber threat landscape and emphasise the importance of cyber security for organisations.

The Australian Signals Directorate reported in November 2024 that it received over 87,400 cybercrime reports in the 2023-2024 period, which is on average a report every six minutes and is a timely reminder for the need for good governance in relation to cyber security.

Cyber threats are an integral part of every organisation's risk landscape, especially as businesses increasingly rely on internet-facing systems and digital growth strategies. The dynamic nature of cyber threats requires boards to stay responsive to both existing and emerging risks and to understand their organisation's cyber resilience.

AICD reports that directors frequently cite cyber security and data theft as their top concerns. The updated Principles provide a practical framework to help directors and governance professionals proactively manage cyber risks.

The key updates to the AICD's Principles include:

• Addressing digital supply chain risks, data governance, and regulatory changes;
• Regular upskilling for directors and management;
• Integrating cyber risks into existing risk management frameworks;
• Ensuring clear cyber incident response plans and well-defined responsibilities;
• Avoiding technical jargon in documentation and communication; and
• Safeguarding key digital assets and regularly evaluating risk controls.

Federal Government Releases First Nations Clean Energy Strategy

On 6 December 2024, the Federal Government released its first-ever First Nations Clean Energy Strategy (Strategy).

The Strategy has been developed with public consultation and stakeholder engagement, with extensive input from First Nations peoples.

The Strategy provides a five-year national clean energy framework for governments, industries and communities which guides investment, influences policy, and supports First Nations people to self-determine how they participate in, and benefit from, Australia’s clean energy transition.

The Strategy's vision is underpinned by three goals:

• Empower First Nations communities with clean energy by investing in clean energy systems and removing obstacles that prevent First Nations communities from a reliable and affordable clean energy supply;
• Achieve economic benefits for First Nations peoples by ensuring their voices are considered when developing clean energy policy and promoting First Nations people's ownership of energy projects; and
• Enable equitable partnerships by improving how industry and government engage and work with First Nations communities to achieve mutual benefits.  

Guarantee of Origin Scheme and Production Tax Credits

On 28 November 2024, the Australian Parliament passed the Future Made in Australia (Guarantee of Origin) Bill 2024 (Cth), the Future Made in Australia (Guarantee of Origin Charges) Bill 2024 (Cth) and the Future Made in Australia (Guarantee of Origin Consequential Amendments and Transitional Provisions) Bill 2024 (Cth).

The legislation helps put the 'Future Made in Australia' agenda (as reported by K&L Gates in June 2024) into action. 

The laws:

• Establish the voluntary Guarantee of Origin (GO) scheme, a high-integrity certification scheme that ensures renewable energy and decarbonised products are properly valued; 
• Help Australian producers remain competitive in domestic and global markets by accurately representing the emissions embedded in their products; 
• Seek to provide businesses and investors with regulatory certainty; and
• Aim to make it easier for major investors to invest in renewable projects in Australia.

In effect, participants that opt in to the GO scheme who produce low-emissions products or renewable electricity will be able to create certificates which contain information about the attributes of the renewable electricity or low-emissions products that they represent. These certificates can be tracked through a public register.

In addition to the above laws, the Federal Government also proposed the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 (Cth) (Bill).

Under the Bill, hydrogen producers will receive AU$2 per kilogram of renewable hydrogen produced, while critical minerals processors will get a 10% tax break on processing and refining costs.

The incentives will be available for up to ten years per project but the project must make a final investment decision by 30 June 2030. Projects must be located in Australia and owned by a corporation (not a trust or other entity) that is either an Australian tax resident or a foreign resident with an Australian permanent establishment.

The tax benefits will only be received after the relevant projects are operational and producing.

To qualify, companies must meet certain community benefit requirements including requirements to "promote safe and secure jobs that are well paid and have good conditions", "strengthen domestic industrial capabilities" and "demonstrate transparency in relation to the management of tax affairs". Non-compliance allows tax offsets to be suspended which will give significant de facto power to Government over relevant projects.

View From Abroad

Hong Kong and Switzerland to Further Mandate Sustainability Reporting

The Hong Kong government has announced a roadmap to implement International Financial Reporting Standards – Sustainability Disclosure Standards (ISSB Standards) for publicly accountable entities (PAEs) by 2028.

Starting in January 2025, all main board issuers will be required to disclose climate-related information based on a "comply or explain" principle, which is modelled on ISSB Standards. From there, it will be mandated that large-cap issuers disclose climate-related information by 2026, before all PAEs adopt Hong Kong Standards by 2028.

The Hong Kong government will also develop a regulatory framework for assurance of such climate-related reporting in alignment with international standards and will introduce data and technology, such as green fintech, free data tools, and an expanded Hong Kong Taxonomy for Sustainable Finance to improve the quality of reporting.

In Switzerland, the Swiss Federal Council has initiated a consultation process between 6 December 2024 and 21 March 2025 to update its sustainability-related disclosure rules in line with global frameworks and European Union (EU) standards. Any amendments resulting from the consultation are planned to be enforced by January 2026.

Amendments will include companies being mandated to provide detailed plans for achieving Switzerland's net-zero emissions target by 2050 and will also ensure that climate-related disclosures are provided in electronic formats that are both human and machine-readable. Further, businesses will now be able to fulfill climate-related reporting obligations by adhering to internationally recognised frameworks, such as ISSB Standards or the EU's European Sustainability Reporting Standards.

These latest sustainability reporting mandates from Hong Kong and Switzerland are indicative of an increased global effort to implement international climate standards and progress achieving net-zero emissions targets.

European Union to Delay Deforestation Regulation

The EU will delay the implementation of its deforestation regulation by 12 months to December 2025 to provide businesses, foresters, farmers and authorities with additional time to prepare for compliance with the new obligations.

The EU deforestation law came into force in 2023, however compliance was originally not required until December 2024. The law seeks to ensure that commodities such as cattle, wood, cocoa, soy, palm oil, coffee, rubber, and their derived products are deforestation-free before being sold in or exported from the EU. The regulation is aligned with the European Green Deal and EU Biodiversity Strategy for 2030.

The delay was initially threatened if an agreement was not reached with the European People's Party, which included adding a category of 'no risk' countries that would have reduced checks. However, the EU will not change the substance of the regulation, and the European Commission has instead agreed to revisit whether the additional category should be included as part of a general review of the legislation in 2028.

The provisional agreement to delay still requires endorsement from the Council and European Parliament, which will need to occur before the original application date of 30 December 2024. 

Global Managers Sued Over Climate Stance

A coalition of 11 Republican-led US states led by Texas are suing three global managers, alleging their climate activism has violated antitrust laws and has led to decreased coal production and increased energy prices. The lawsuit stands out as one of the highest profile challenges to corporate efforts aimed at advancing environmental, social, and governance (ESG) goals.

The states allege that the large asset management firms used their market influence and participation in climate-focused groups to pressure coal companies into reducing their outputs, which has then caused electricity shortages and higher utility bills. Texas Attorney-General Ken Paxton and his Republican counterparts argue that "competitive markets – not the dictates of far-flung asset managers – should determine the price Americans pay for electricity."

The states seek to prevent the firms from using their investments to vote on shareholder resolutions and taking actions that could reduce coal production and restrict market competition. 

The complaint is based on the Clayton Antitrust Act 1914 (US), which prohibits the purchasing of shares if it substantially reduces market competition. It accuses the firms of using their holdings in coal companies to push for lower carbon emissions while producing high profits for the investors. The states claim the investment firms joined initiatives like Climate Action 100+ and the Net Zero Asset Managers Initiative to coordinate industry-wide reductions in coal output.

One manager has dismissed the allegations as baseless, arguing that the suggestion it invested in companies to harm them "defies common sense" and conflicts with Texas' pro-business reputation.

The authors would like to thank graduates Daniel Nastasi, Katie Richards and Monique Yujnovich for their contributions to this alert.

Additional Authors:  Nathan Bodlovich, Dhivya Kalyanakumar, Cathy Ma, Daniel Shlager, Bernard Sia