Australia’s financial regulator outlined details of a climate vulnerability assessment (CVA) that is being undertaken by the country’s top five banks. This is to assess exposure to climate risk, and their response to different scenarios. With the increasing weather-related disasters, taking many lives, the regulators and central banks are looking to ready companies and financial systems to cope with the fallout.
The Australian Prudential Regulation Authority’s (APRA) climate assessment is also looking at how banks can make changes to their business models. They are also taking steps to tackle different climate-related scenarios. Commonwealth Bank of Australia, Westpac Banking Corp, National Australia Bank, Australia and New Zealand Banking Group and Macquarie Bank started participating in the CVA in June. By the end of this year, they all are expecting to submit their first analysis.
The CVA focus on a rapid reduction in emissions by 2050. APRA Chair Wayne Byres said in a statement that the climate change is a global challenge, which drives major policy responses and investment decisions around the world. These will have consequences for Australian companies, that presents both risks and opportunities. A U.N climate panel warned in August that global warming is dangerously close to spiralling out of control.