On 12 March, as part of our latest public forum on climate change and the economy, CPD hosted a landmark address by Reserve Bank of Australia (RBA) Deputy Governor Dr Guy Debelle on how climate change could impact growth, inflation and monetary policy.
The forum was the third in a CPD series, hosted by MinterEllison Lawyers, that has included a trifecta of statements on climate change by Geoff Summerhayes from ARPA (2017), John Price from ASIC (2018) and now Dr Guy Debelle from the RBA. The event was the first occasion that a senior official from the RBA has given a dedicated speech about climate change and the economy.
In his remarks, titled Climate change and the economy, Dr Debelle said that “both the physical impact of climate change and the transition are likely to have first-order economic effects.” He emphasised that climate change is a trend change — not a cycle that will wax and wane. He said climate could have major consequences for financial stability, especially if key transitions are disorderly or abrupt.
Following his remarks, Dr Debelle was joined for a panel discussion by Kate Mackenzie (European Climate Foundation), Blair Comley PSM (former Secretary of the Department of Climate Change and Energy Efficiency) and Katharine Tapley (Head of Sustainable Finance, ANZ). The panel discussion was moderated by CPD Policy Director Sam Hurley and accommodated several questions from the audience, including from Laura Tingle (ABC 7.30), Peter Hannam (Sydney Morning Herald) and Emma Herd (Investor Group on Climate Change). The final question of the night came from Susan Moylan-Coombs, the granddaughter of the first Governor of the Reserve Bank of Australia, Herbert Cole “Nugget” Coombs.
The event was opened by Stuart Johnson from MinterEllison Lawyers, who noted the close partnership between CPD and MinterEllison in producing the Hutley-Hartford-Davis opinion on directors’ duties and climate change, and this series of public forums.
Dr Debelle was introduced by CPD’s CEO, Travers McLeod who highlighted other pivotal speeches on the issue by regulators and central banks in recent years, starting with Mark Carney, Governor of the Bank of England, who described climate change as the ‘tragedy of the horizon’ in September 2015. Until then, company boards and financial market regulators had given climate change little attention. Travers acknowledged other people and organisations central to lifting ambition on climate change, some of whom attended the CPD forum, such as Emma Herd from the Investor Group on Climate Change, Ian Learmonth from the Clean Energy Finance Corporation, David Atkin from Cbus, Zoe Whitton from Citi Australia — among others.
In his speech, Dr Debelle stated
“the economy is changing all the time in response to a large number of forces. But few of these forces have the scale, persistence and systemic risk of climate change.”
On the physical impacts of climate change, Dr Debelle said that
“we need to reassess the frequency of climate events. In addition, we need to reassess our assumptions about the severity and longevity of the climatic events.”
He also discussed the importance of effective climate policy:
“The policy environment has a key effect as well as the climatic environment, decisions that are taken now can have significant effects on future climate trends and can limit or eliminate the ability to mitigate the effect of those trends.”
“Financial stability will be better served by an orderly transition rather than an abrupt disorderly one,” Dr Debelle said.
He strongly endorsed the need for businesses to implement the recommendations of the Task Force for Climate-related Financial Disclosures, emphasising the important role of scenario analysis.
The Reserve Bank’s intervention is another crucial step on climate change by Australia’s leading financial and economic regulators, following earlier public statements by APRA and ASIC, hosted by CPD in 2017 and 2018 respectively, on how climate change could affect profitability, financial system stability and corporate governance.
The panel warmly welcomed Dr Debelle’s speech. Katharine Tapley described it as a ‘waymarker’, stressed how climate change is high up on her clients’ concerns and affirmed the rapid growth of green finance. Blair Comley highlighted the importance of (government) policy, and of information provision and access. Kate Mackenzie stressed the limits to the remaining time window for action and touched on the implications of climate change on the housing market.
CPD Chair Terry Moran AC closed the night with a vote of thanks to the panellists and to Dr Debelle.
The public forum was at capacity — booked out a month ahead of the event with a long waiting list — indicating the enormous public interest in and relevance of the event.
CPD would like to thank Sarah Barker, Stuart Johnson and the team at MinterEllison for hosting the event, and panellists and audience who contributed to an engaged and candid discussion.
Reserve bank deputy governor gives speech on the economic impact of climate change, ABC 730 program, 12 March 2019
Climate change costs will have knock-on effects for interest rates, Reserve Bank warns, Laura Tingle, ABC, 12 March 2019
change, Erik Bagshaw and Nick Bonyhady, Sydney Morning Herald, 12 March 2019
RBA warns of ‘abrupt, disorderly’ effects of climate change, James Fernyhough and Bo Seo, Australian Financial Review, 12 March 2019
RBA warns on climate fallout, Michael Roddan, The Australian, 12 March 2019
Climate change poses risks to Australia’s financial stability, warns RBA deputy governor, Katharine Murphy, The Guardian, 12 March 2019
The Reserve Bank has warned the challenges of climate change threaten Australia’s financial stability Rosemary Bolger, SBS News, 13 March 2019
RBA warns of threats to financial stability from climate change, Fran Kelly, ABC RN Breakfast, 13 March 2019
RBA boss calls for urgent action on climate to avoid economic calamity, Samantha Maiden, The New Daily, 13 March 2019
Guy Debelle: climate change and the economy, Guy Debelle, The Mandarin, 13 March 2019
RBA deputy warns climate change a threat to Australian economy, Peter Ryan, ABC AM, 13 March 2019
Milestone’ RBA climate speech seen as ‘changing the conversation, Peter Hannam, Sydney Morning Herald, 13 March 2019
What the Reserve Bank did — and didn’t — say about climate change, Bernad Keane, Crikey, 13 March 2019
RBA’s climate change speech hints at radical policy shift, James Fernyhough, Australian Financial Review, 13 March 2019
Why the RBA spoke up on climate change, John Kehoe, Australian Financial Review, 15 March 2019
Climate kids and financial stability make climate change the crisis the government had to have, Laura Tingle, ABC Online, 2019, Laura Tingle, ABC online, 15 March 2019
How climate change will affect your mortgage, Jessica Irvine, Sydney Morning Herald, 15 March 2019
Debate on climate change is over and we are owed an apology, Malcolm Farr, News.Com.Au, 17 March 2019
The RBA has sounded the alarm on climate change. Time to sit up and take notice, Greg Jericho, The Guardian, 17 March 2019
RBA issues stern climate change warning, Elizabeth McArthur, Financial Standard, 18 March 2019
Australian parties spar over climate change ahead of elections, Fumi Matsumoto, Nikkei Asian Review, 18 March 2019
Climate change and the economy, speech by RBA Deputy Governor Dr Guy Debelle, March 2019.
Climate change, speech by ASIC Commissioner John Price, June 2018
Climate horizons: scenario and strategies for managing climate risk, CPD Report, June 2018
The weight of money: a business case for climate risk resilience, APRA Executive Member Geoff Summerhayes, November 2017
Legal opinion on directors duties and climate change, Noel Hutley SC and Sebastian Hartford-Davis, October 2016