Worsening natural disasters across Australia illustrate the threat of asset damage and operational disruption arising from physical climate risks
The Australian government has announced it will join the international Coalition for Climate Resilient Investment (CCRI) with the aim to better integrate climate risk into investment decision making.
CCRI is a public-private coalition of institutional investors, banks, insurers, rating agencies and governments, representing over $11 trillion in assets. The finance sector-led initiative was launched at the UN Climate Action Summit in 2019, with support from the UK Government, World Economic Forum and Global Commission on Adaptation, to develop consistent frameworks to integrate and accurately price physical climate risks in investment decisions.
Worsening natural disasters across Australia, including the intensity of the Black Summer bushfires, illustrated the threat of asset damage, operational disruption and human suffering from physical climate risks and disasters that continued to escalate in 2020. In response to the rising frequency of such extreme events, the integration of physical climate resilience into mainstream infrastructure investment is the CCRI’s core goal.
Technical deliverables from CCRI will help the Australian government to mitigate the impacts of climate change, reduce the country’s exposure and channel more private capital towards building greater resilience across economies and communities.
Sussan Ley, Australian Minister for the Environment, said: “We are joining global partnerships and taking the lead in building resilient communities. Climate adaptation is about taking practical actions to help our environment, our communities and our economy deal with the impacts of climate change that are already taking place. We are focused on the steps we can take now and in the future to create a more resilient Australia.”
Carlos Sanchez, director of Climate Resilience Finance at Willis Towers Watson and CCRI Executive Director, said: “The Australian Government’s decision to join the Coalition for Climate Resilient Investment is a welcome step toward bolstering the necessary frameworks for managing climate risk and accelerating private capital support for climate adaptation measures. We look forward to working together in order to help deploy more efficiently the flow of funds for investment in infrastructure projects, adding an important element towards enabling a transition to a more climate-resilient, low-carbon, sustainable economy.”
According to the Investor Group on Climate Change (IGCC), a supporting institution of CCRI, expert advice presented to the Australian Climate Roundtable and the Royal Commission into the National Natural Disaster Arrangements shows Australia remains deeply unprepared for the current and future physical risks created by a warming planet.
Emma Herd, IGCC chief executive, said: “Given the scale of the challenge, governments alone won’t be able to shoulder the load and private capital will be essential to building climate change resilience across our economy.”
”The need for cross-sector and public and private collaboration will be particularly acute as governments will be more fiscally challenged after deploying immediate economic relief in the wake of the COVID-19 pandemic. By joining the CCRI, Australia will become part of an international cohort working to address common climate resilience challenges across the financial system.”