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| A 'Kodak moment" refers to the film giant that failed to see the rapid rise of the digital world. (Reuters: Stefan Wermuth) |
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Australian Prudential Regulation Authority executive Geoff Summerhayes said businesses that ignore climate change risks could confront their own "Kodak moment", referring to the film giant that failed to foresee the rapid rise of the digital world and went into bankruptcy protection.
"Companies that delay or avoid adjusting to new economic realities, no matter how famous or successful, can quickly find themselves on the verge of a Kodak moment," Mr Summerhayes warned an insurance conference in Singapore.
Mr Summerhayes said the warnings about foreseeable and potentially catastrophic climate change as a first-order economic risk were no longer limited to fringe groups and environmentalists but now include conservative bodies, such as the Reserve Bank of Australia, APRA and corporate regulator ASIC.
"When a central bank, a prudential regulator and a conduct regulator, with barely a hipster beard or hemp shirt between them, start warning that climate change is a financial risk, it's clear that position is now orthodox economic thinking," he said.
"Debate has largely moved on from whether there is a threat that requires a response to questions about the urgency of threat, who should carry the financial burden of addressing it, and whether the benefits are worth the cost.
"Regardless of their choice, some pain will be felt; the only questions being how much and when."Mr Summerhayes said while businesses around the world were struggling to find the appropriate balance, data around how to best manage climate change "remains under-developed, making informed debate challenging … and decision-making difficult."
Local electricity sector will be '100pc renewables'
Mr Summerhayes told the International Insurance Society Global Insurance Forum that, while climate change debates exist around the world, they are particularly sensitive in Australia given the nation's exports of iron ore, coal, natural gas and crude petroleum.
Australian bosses have started caring about climate change  |
"The benefit of such an approach is a substantial reduction in the expected catastrophic physical risks of climate change in the long-term."
Earlier this week, outgoing National Australia Bank chairman and former Treasury secretary Ken Henry told The Business that the corporate sector was already moving ahead to confront climate change, rather than waiting for government or regulatory action.
"Australia's energy transition is going to happen anyway," he told the program.
"Almost no matter what the policy framework is, the decisions taken by business leaders today will ensure that by about mid-century Australia's electricity sector will be 100 per cent renewables. It's almost irrespective of what decisions are taken at a policy level."
Extended interview with outgoing National Australia Bank Chairman and former Treasury Secretary Ken Henry. The Business
Mr Summerhayes repeated earlier calls for the finance industry to disclose their climate risks to put themselves in the best position to adjust to "a new economic reality".
Links
- Fund set up to fight climate change considers 'insane' idea to give money to coal-fired power
- Pope Francis backs carbon price in appeal to climate deniers
- World's largest sovereign wealth fund to dump billions in coal investments
- Nearly a billion people on the frontlines of climate change, including millions of Australians: report
- Heavyweights Now Speaking With One Voice On Climate Change Risks
- 'Disastrous': Australia's Carbon Emissions Jump As Coal-Fired Power Ramps Up
- Insurance Premiums To Rise As Extreme Weather Conditions Become More Common
- Climate Change: Three Of Australia’s Big Four Banks Reviewing Exposure To Fossil Fuels
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