A lack of structures, systems and co-ordination is preventing capital from being invested in climate adaptation and resilience, the latest Australian Sustainable Finance Institute gathering found.

Private capital is available but will not flow at scale without the right enabling conditions, ASFI CEO Kristy Graham says.

She notes government has a critical role to play setting direction, establishing a supportive policy and regulatory environment, and providing early-stage backing.

ASFI has issued a report with priority actions for financing adaptation and resilience.

It will work on raising industry funding to begin creating a methodology for developing adaptation and resilience criteria. It will also work to improve valuation frameworks for losses and benefits, and clarify benefit distribution and responsibilities.

A public-private collaboration will expand the Australian Sustainable Finance Taxonomy to define adaptation and resilience activities, create comparability, reduce transaction costs and provide market signposts for investors.

Public sector leadership is essential to structure projects and draw private capital, ASFI says.

A priority will be to deploy risk-sharing mechanisms, including concessional finance, and enable investment in priority sectors.

The report says capital markets will invest, but they need mechanisms to aggregate projects, plus improved data, metrics and risk communication.

Many projects do not progress because of design challenges, lack of scale and the difficulty of aligning multiple stakeholders, the report says.

“There is a need to structure projects in ways that bring together public and private actors, are sufficiently large and replicable for capital markets, and which avoid stalling during development.”

Find the report here.