Tackling climate change a ‘financial necessity’ says top Australian banking regulator

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He advised the UN’s sustainable insurance coverage discussion board that the concept of taking motion to handle local weather change solely as “a luxurious or monetary burden was redundant”.

Talking because the discussion board’s chair Mr Summerhayes mentioned there was little question that failure to satisfy the targets set down beneath the Paris Settlement would have severe penalties for each environmental and monetary stability.

“The talk has sometimes centred round the financial value of performing, with sceptics alternatively arguing that local weather change is a con, or overstated, or that lowering carbon emissions will hurt Australia’s economic system on the expense of rivals,” he mentioned.

“As regulators and supervisors, our mandates are additionally strongly centered on monetary sustainability: serving to the establishments we oversee stay robust, secure and capable of proceed assembly their guarantees to their prospects.

“With each passing yr, because the world strikes nearer in the direction of the low carbon economic system, these two definitions turn into ever extra entwined.”

He advised the viewers the story of his 81-year-old mom, a local weather change sceptic and life-long horse breeder who lately had a racing meet cancelled attributable to warmth for the primary time in it historical past, leaving caterers, homeowners, trainers, bookies and insurers within the lurch.

“What this small instance demonstrates is that local weather change is quickly transferring past a purely partisan or ethical challenge – certainly, the menace is distinctly monetary in nature,” he mentioned.

US electrical energy large PG&E Corp filed for chapter in January within the face of an estimated $30 billion legal responsibility attributable to California’s 2017 and 2018 wildfires.

Prime Minister Scott Morrison and Deputy Prime Minister Michael McCormack investigate the drought in Mulloon in October.

Prime Minister Scott Morrison and Deputy Prime Minister Michael McCormack examine the drought in Mulloon in October. Credit score:Alex Ellinghausen

“It is not going to be the final firm to fold because the bodily, transitional and legal responsibility dangers of worldwide warming chunk ever extra sharply in years to come back,” mentioned Mr Summerhayes. “Firms and international locations that fail to mitigate towards climate-related dangers and seize rising alternatives are going to be left behind.”

In response to insurance coverage large Swiss Re, 2018 was the fourth costliest yr on file. The first contributing issue was pure disasters, round 80 per cent of which have been climate-related.

Mr Summerhayes mentioned monetary regulators ought to transfer in the direction of requiring climate-risk disclosures.

“These firms which can be extra superior of their response to rising local weather dangers will probably be higher positioned to fulfill regulatory scrutiny,” he mentioned.

Prime Minister Scott Morrison mentioned this month that local weather change had contributed to latest devastating excessive climate occasions in Australia.

The feedback sparked the push from reasonable Liberal MPs to place local weather change again on the celebration’s re-election radar. The Coalition has struggled to unite round vitality coverage for greater than a decade.

The MPs have argued for insurance policies to assist adapt to the altering local weather, embrace low-emissions hydrogen know-how and additional increase the nation’s standing in local weather science.

Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.

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