MEDIA RELEASE: Climate risk regime can make Australia part of the solution

Climate risk regime can make Australia part of the solution 

  • A uniform climate risk regime will bring Australia into line with major global economies
  • Australian business and investors are already responding to market signals
  • Uniform expectations help build sectoral and national pictures of risk and opportunity 

Monday 12 December 2022 – The announcement of moves towards a clear and uniform taxonomy for climate risk and opportunity for Australian corporate and financial institutions is a vital and necessary step towards an orderly climate transition.

Today’s announcement by Federal Treasurer Jim Chalmers at the Australian Sustainable Finance Institute will ensure greater certainty and confidence among investors, businesses and regulators to respond to the financial risks and opportunities presented by climate change and the global energy transition.

The signalled intention to include Commonwealth entities in the reporting regimes alongside other market participants will support clearer and more complete pictures of climate risk and opportunity at a national, regional, global and sectoral level.

As industry consultation commences alongside the work of the International Sustainability Standards Bureau, the development of an Australian climate risk disclosure regime will see the Australian financial system better positioned to participate in an swift, orderly and just transition to net zero.

Centre for Policy Development Sustainable Economy Program Director Toby Phillips said the announcement signalled an intention to build climate resilience and adaptability into the Australian financial system.

“The largest and most influential private sector investors and corporations are overwhelmingly responding to climate risk in line with established and emerging frameworks,” Mr Phillips said.

“They are doing this because it makes good business sense to respond to the way climate change is reshaping the global economy and global financial markets.

“Despite leadership from some of the biggest players, there is still significant variance in how the financial sector deals with climate risk.

“The government’s decision to move Australian markets into line with this global practice will deliver greater comparability, certainty and clarity both within Australia and abroad, and will empower regulators, businesses and investors to participate in sustainable finance with confidence.

“The indication that public authorities will be included in this taxonomy is important as they are some of the most significant participants in the Australian economy, and yet they are insulated from the pressures that have led to climate risk disclosure across private markets.

“Nevertheless their inclusion is necessary for a complete and shared picture of climate risk and opportunity for investors, business leaders and policymakers”.

ENDS

Background on CPD’s sustainable economy program: 

The Centre for Policy Development’s sustainable economy program has undertaken significant work on climate risk and the economy.

 

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