Fin services needs to walk the walk on climate risk

21 March 2019
| By Hannah Wootton |
image
image
expand image

Banks, insurers and superannuation trustees need to do more than talk the talk where climate change is concerned, with the Australian Prudential Regulation Authority (APRA) urging them to also walk the walk and act to mitigate risks to their customers.

While APRA found that many entities were increasing their understanding of the threat of climate change, it said more needed to be done to improve how organisations disclose and manage these risks in coming years.

“APRA’s views on the economic risks of climate change, recently echoed by the Reserve Bank of Australia, are consistent with those of financial regulators internationally,” APRA executive board member and chair of the United Nations Environment’s Sustainable Insurance Forum, Geoff Summerhayes, said.

“These risks are material, foreseeable and actionable now. Uncertainty over long-term impacts or policy direction is not an excuse for doing nothing.”

A survey by the regulator of 38 large banks, insurers and super trustees found that a third believed that climate change was a material risk of their business now, with a further half thinking that it would be in the future.

Respondents nominated reputational damage, flooding, regulatory changes and cyclones as the top climate-related financial risks, with most banks already considering such risks as part of their risk management frameworks.

The outlook wasn’t all bleak however, with respondents also identifying strategic opportunities in transitioning to a low carbon economy, such as developing innovative products and services and meeting the growing demand for green investment options.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 5 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

18 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 3 days ago