An Australian-first collaboration between climate scientists, insurers and the finance sector has produced new guidance for assessing the physical risks – such as tropical cyclones, bushfires and floods – of climate change to homes, buildings and critical infrastructure.
The Climate Measurement Standards Initiative (CMSI) has developed a set of open-source, voluntary guidelines that will, for the first time, provide Australian banks, financial institutions and insurers with consistent scientific and technical guidance on how to assess the risk of climate-related damage to their buildings and critical infrastructure.
Chris Lee, CEO of Climate-KIC Australia and convenor of the CMSI says: “This has been an historic collaboration between Australia’s leading industry, scientific and financial experts. The Australian financial sector needs to assess how cyclones, floods, hailstorms, fires, droughts, heatwaves and coastal inundation will likely affect their assets.
“The CMSI provides guidelines specific to Australian conditions. Consumers will have confidence in the resulting disclosures because they’ll be understandable, consistent, comparable and supported by Australia’s leading climate experts.”
Emma Herd, CEO of the Investor Group on Climate Change says:
“The intensifying and compounding extreme weather events that are being fuelled by climate change pose a significant risk to the value of assets in investors’ portfolios and, in turn, the sustainable returns for millions of Australians through their superannuation. These new standards will help investors understand their exposure and adjust portfolio strategies accordingly.”
The CMSI has been designed specifically to support the G20 Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) that made recommendations on how to disclose risks associated with climate change to stakeholders.
Companies and organisations involved in developing the CMSI guidelines include QBE, Suncorp, IAG, RACQ, NAB, Westpac, Commonwealth Bank, HSBC Australia, Munich Re, Swiss Re, Leadenhall Capital Partners, MinterEllison, the Investor Group on Climate Change and Climate-KIC Australia.
Preeminent scientists from the CSIRO Climate Science Centre, Bureau of Meteorology, and leading universities under the auspices of the National Environmental Science Program’s Earth Systems and Climate Change (ESCC) Hub have led development of the scientific guidelines.