Financial regulator warns business on climate risk

Australia’s financial regulator (APRA) has warned that climate change poses a material risk to the entire financial system, and has urged companies to start seriously adapting.

Geoff Summerhayes, from the Australian Prudential Regulation Authority, says it is unsafe for companies to ignore the risks of climate change just because there is some uncertainty, or “even some controversy”, about the policy outlook. (See story here.)

How will Tasmanian businesses be affected by climate change?

In short, we don’t know at this point. For most businesses it’s probably not on their radars yet. For some, such as Hydro Tasmania and those in the fisheries field, it definitely is because those enterprises have been significantly affected by abnormal weather events in recent times.

Ideally, every business should incorporate climate change risk in their normal risk management practices. This is only just beginning to happen, and even then mainly within highly exposed enterprises.

A recent survey of 2,000 overseas businesses conducted by an independent business advisory body, First Carbon Solutions, has produced some interesting results as shown by the chart below.

Seventy of those participating businesses reported that climate change has the potential to significantly impact their revenues. This may provide a useful starting point for looking at local situations.

In 2015 Climate Tasmania held a forum on food production where we heard from people in the Tasmanian farm sector, grappling with impacts of climate change on their farm management practices. This year we are engaging with local government – being in effect, very large corporate entities that are responsible to ratepayers – with a view to sharing information and expertise on risk management approaches in relation to climate change.

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