On 21 November, the Centre for Policy Development (CPD) convened a business roundtable on climate change and sustainability which brought together senior executives and directors from Australia’s biggest banks, insurers, investors, businesses and superannuation funds, senior representatives from Australia’s leading financial regulators and key policy departments, and a number of special local and international guests.
Participants included Dr Guy Debelle (Reserve Bank of Australia), Sarah Breeden (Bank of England), John Price (ASIC), Geoff Summerhayes (APRA), Emma Herd (IGCC), Don Russell (AustralianSuper), Martin Parkinson (former Secretary of the Department of Prime Minister and Cabinet and Treasury), Sarah Barker (Minter Ellison), Greg Combet (IFM Investors) and former High Court Justice and Royal Commissioner the Hon Kenneth Hayne AC QC.
CPD convened the roundtable to consider what Australia needs to prioritise next in its climate risk responses, amidst mounting climate impacts and growing scrutiny of Australia’s climate credentials. This was the latest in a long-running series of CPD research, events and thought leadership on the economic and financial dimensions of climate change, including the legal opinions by Noel Hutley SC on directors’ duties and climate risk, and landmark public statements on climate by APRA, ASIC and the Reserve Bank hosted by CPD since 2017.
The discussion highlighted that the bar on climate risks continues to rise for Australian company directors, investors and regulators. It also found strong support for accelerated action on climate change and a new national mission to address climate risk and opportunity across Australia’s economy and financial system.
A summary of the main conclusions from the discussion is available, along with other key documents. Please note that this summary has been prepared by the roundtable organisers and does not necessarily reflect official policy or the position of any of the individuals or organisations present at the roundtable.
- The consequences of climate change are upon us now, and decision makers across the Australian economy have a clear and increasing obligation to address the risks and opportunities it presents. Australia’s economy and financial system is particularly exposed to climate impacts, and there has been a paradigm shift in regulatory and legal expectations on climate risk management and disclosure. Boards must recognize the nature and scope of climate risk and respond accordingly, including through rigorous application of the TCFD framework.
- Climate risk must be made more visible and front of mind for company directors to pull forward the transition in the real economy. A significant ramp up in the availability and quality of decision-relevant information is required. Regulators, firms, governments and sectors will need to work together to establish consistent scenarios, to share data, and to identify and commit to science-based targets and a net-zero trajectory consisted with the Paris Agreement. Joint work and resources to underpin more rigorous and consistent scenario analysis and stress testing is a key priority.
- More effective collaboration and leadership across the public and private sectors is an essential condition to understand and respond to climate risk and opportunity as it impacts the Australian economy as a whole. Multiple initiatives to are underway to better understand sustainable finance and climate and disaster risk across financial regulators, industry and government. Now is the time to join up this effort across public and private sectors to understand how climate risk impacts our financial system and economy, and what can be done about it. This needs to be an economy-wide mission, with suitable coordination and sharing of resources, data and expertise.