Feb 17, 2017 - 6:15pm
The Climate Institute said today that the speech by Geoff Summerhayes, APRA member, sends a clear signal to business that it is time to ensure your house is in order on managing the impacts of climate change and the transition to clean energy.
At his speech to the Insurance Council of Australia’s annual conference, Mr Summerhayes made clear that the Australian Prudential Regulatory Authority (APRA), which supervises financial institutions, expects all forms of climate risk needs to be considered by Australian financial institutions. The speech covered climate impact risk (the physical effects of climate change); transition risk (the impacts of changes required to keep climate change below 1.5-2°C); and liability implications for company directors and others who fail to take action on these foreseeable risks.
“We are delighted to see Australia’s prudential supervisor sending a clear signal to business and governments that climate change-related risk can be a material risk to our financial institutions,” said Kate Mackenzie, head of finance and investment.
“Speeches are a key form of communication for authorities such as APRA, so this is a clear signal that Australian financial institutions need to understand their climate risk and have a considered response.”
“While our politicians are turning our response to climate change and energy policy into political playthings, investors, business leaders and financial system regulators around the world are seeking ways to manage the transition to clean energy. It is time our leaders in Canberra did the same,” said Mackenzie.
Mr Summerhayes’ speech cited work on climate risk for company directors published by the Governance Leadership Centre at the Australian Institute of Company Directors, which was written by The Climate Institute’s head of finance and investment, Kate Mackenzie, together with Climate Policy Research Pty Ltd. The speech also referenced several topics covered in recent Climate Institute reports including the potential systemic financial implications of climate change, and the risks that may manifest on banks’ balance sheets via real estate prices affected by climate change impacts.
For more information
Kate Mackenzie | Head of finance and investment | 0415 905 455