It is no longer good enough for banks, insurers and superannuation funds to disclose climate risks, they must take action to address them, the Australian Prudential Regulation Authority has warned.
APRA, the regulator charged with overseeing the soundness of Australia's financial system, said on Wednesday it would "increase its scrutiny" on how financial services companies were changing their businesses to protect themselves against the physical, regulatory and economic effects of climate change.
"The world is rapidly transitioning to a low carbon economy, driven principally by the decisions of governments, business leaders, investors and consumers. Companies that fail to respond to these forces risk being left behind," APRA's head of insurance Geoff Summerhayes said.
"Gaining an understanding of the risks is an important first step for entities, but APRA wants to see continuous improvement in how organisations disclose and manage these risks over coming years."
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| APRA's head of insurance Geoff Summerhayes said financial services companies must start acting to mitigate climate risk. Chris Pavlich |
It also closely followed a landmark speech by Reserve Bank of Australia's deputy governor Guy Debelle, in which he warned that a failure to act on climate climate change would lead to an "abrupt, disorderly" transition, with implications for monetary policy.
Links
- Banks need to mitigate climate risk: APRA
- APRA to banks, insurers: Act on climate risk
- Fin services needs to walk the walk on climate risk
- 'Change Now Or Pay Later': RBA's Stark Warning On Climate Change
- Climate Change Poses Financial Stability Risk – RBA
- Climate change-related litigation was once seen as a joke, but it could soon become business reality
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