Funding agencies to weigh climate risk after case 'win'

A landmark case is expected to give taxpayers greater transparency on how federal agencies spend their money, climate lawyers say.

Human rights and environment organisation Jubilee Australia on Friday announced the "successful conclusion" of legal action against the Northern Australia Infrastructure Facility (NAIF) and its board of directors.

A Federal Court action filed in July 2023 alleged the facility and another federal body, Export Finance Australia (EFA), failed to comply with legal obligations to report on the environmental impacts of projects they funded.

It was a first attempt to force compliance with environmental laws requiring government agencies to report annually on the impact of their activities on the environment - including communities and people - and what steps, if any, they were taking to minimise harm.

The case marks a "step change" in reporting by Australian government entities, Jubilee's director of climate justice Suhailah Ali told AAP.

Prior to the legal action, NAIF's environmental reporting was limited to basic operational activities, such as no personal bins and encouraging staff to limit printing, she said.

The reporting has since expanded to include the environmental impacts of the projects it funds, Dr Ali said.

NAIF has a history of financing fossil fuel projects, including coal and fracking ventures such as the Olive Downs Coking Coal Project, that may not have proceeded without government-backed loans, according to Jubilee.

"It now reports on climate change and other environmental impacts, which is an important step towards transparency and climate accountability," she said.

Meanwhile the export credit agency promptly changed its reporting in 2023 to include climate and human rights impacts, including by the $4.5 billion Perdaman urea project that will buy new gas from Woodside Energy's contentious Scarborough project.

"NAIF and EFA have made substantial changes in how they report on environmental impacts and climate risk," said Isobel Blomfield, associate at Equity Generation Lawyers, representing Jubilee.

"This reporting sets a benchmark for other agencies and financiers to follow," she said.

After the case was filed, Resources Minister Madeleine King amended NAIF's investment mandate requiring it to consider climate change impacts.

Public financial agencies face growing pressure to stop funding fossil fuels projects that are causing climate change, director of the Australian National University's Governing Energy Transition Lab Christian Downie told AAP.

"These agencies are now better placed to scale up investments in renewable energy projects, which will be vital to ensuring that Australia contributes to limiting greenhouse gas emissions," he said.

"The government has already made commitments to cease funding for international oil, gas and coal projects, and this new reporting should be a step toward ending funding for domestic fossil fuel projects as well," he said.