Australian firms told to catch up on climate change risk checks

New report says Australian companies lag behind international organisations

Australian companies are not doing enough work to model the risks of climate change and how it will affect their profitability, a new report by a thinktank says.

Progressive thinktank the Centre for Policy Development says that while most companies have committed to considering what climate change and the Paris climate agreement means for their business strategy, too few have begun using scenario analysis techniques to model what its impacts could be and how to respond to it.

Australia’s financial regulator stepped up its warnings last year that climate change posed a risk to the financial system and urged companies to adapt.

The Financial Stability Board’s Taskforce on Climate-Related Financial Disclosures has identified scenario analysis as a critical tool for companies and investors that are serious about responding to climate risks.

CPD policy director Sam Hurley said while many companies had said they will commit to modelling the impacts of climate change and potential responses for their business, few had actually started to undertake that work.

He said Australia was potentially exposed to large risks due to climate change, but there were also opportunities.

“Scenario analysis is going to be a really important driver of better strategies and of better outcomes for businesses that are preparing for these risks and opportunities,” he said.

“Some organisations in Australia have made a start doing that kind of analysis and more have committed to it.

“But what we’re going to need to see is more consistent, ambitious scenario analysis so that markets and investors have more accurate information when assessing how well companies are placed for transition to a zero-carbon economy.”

Hurley said, internationally, more organisations had begun considering how major emissions reductions and changes in policy as a result of climate change could affect their business and its profitability.

He said some of Australia’s biggest companies in the financial and resources sector already had sophisticated models in place for thinking about climate change and more needed to follow suit.

Companies that didn’t could expect scrutiny from their shareholders, as well as regulators.

“The period for words on this is over. What we really need to see over the next reporting season is companies walking the walk as well as talking the talk,” he said.

“Expectations around proper management of this issue are increasing and for companies that aren’t doing it, it’s going to be harder and harder to get away with it.”


Lisa Cox

The GuardianTramp

Related Content

Article image
Super funds and investors with $34tn urge leaders to speed up climate action
Fund managers call on world leaders to bring in carbon pricing and phase out coal power ahead of G20

Adam Morton

26, Jun, 2019 @3:17 AM

Article image
Australia’s path to net-zero emissions lies in rapid, stimulus-friendly steps
The opportunity to meet the target by 2035 is within our grasp – thanks to much cheaper technology – but we must be ready

Adam Morton Environment editor

03, Apr, 2020 @9:54 PM

Article image
Climate crisis: Australian businesses back net zero carbon emissions by 2050
Carbon Market Institute survey finds 96% believe Australia should not delay transition to decarbonised economy

Sarah Martin

18, Dec, 2019 @4:59 PM

Article image
Australian shareholders should be told of climate risk to profits, says thinktank
Centre for Policy Development urges companies to adopt standardised analysis of climate’s impact on business

Gareth Hutchens

28, Nov, 2017 @5:01 PM

Article image
Most global investors recognise financial risk of climate change, report finds
Global index reveals 60% of asset owners are now taking some action, but warns there is still an ‘enormous resistance’ to managing climate risk

Paul Karp

25, Apr, 2017 @8:00 PM

Article image
Business Council of Australia backs Zali Steggall's climate change bill for 2050 net zero target
Group hails ‘science-based, risk-management’ approach as world heads towards net zero emissions

Adam Morton Environment editor

26, Jan, 2021 @5:56 AM

Article image
Australian businesses, unions and farmers say Paris agreement requires zero emissions plan
Australia Climate Roundtable says climate goals require ‘deep global emissions reductions’

Adam Morton and Katharine Murphy

05, Dec, 2019 @2:43 AM

Article image
Finance sector could face climate-risk testing, says Australian watchdog
Regulator says it may add climate change to the list of scenarios it asks institutions to run to check economic resilience

Gabrielle Chan

08, Mar, 2017 @7:39 AM

Article image
Let's end Australia's climate and energy warfare, Albanese tells Morrison
Labor leader sets out policy pivot in challenge to PM to display genuine bipartisanship

Katharine Murphy Political editor

23, Jun, 2020 @5:30 PM

Article image
Big-emitting Australian businesses could soon face costly carbon levy in Europe
If the Morrison government does not impose emissions reduction policies, exporters may need to buy carbon permits in the EU

Adam Morton Environment editor

10, Feb, 2021 @4:30 PM