APRA deputy chair Helen Rowell shares thoughts on climate risk

She identified main barriers to addressing climate risk

APRA deputy chair Helen Rowell shares thoughts on climate risk

Insurance News

By Roxanne Libatique

The Australian Prudential Regulation Authority (APRA) has published deputy chair Helen Rowell's speech delivered to the inaugural Australian Sustainable Finance Summit in Sydney.

In her speech, Rowell highlighted the results of APRA's climate self-assessment survey, which revealed that four of five boards oversee climate risk regularly, while only two-thirds have incorporated climate risk into their strategic planning process.

In addition, the engagement of APRA and the Reserve Bank of Australia (RBA) with the investment community over the past year confirmed that climate risks have shifted from being a peripheral, boutique subject to being the main topic, with investors and customers demanding organisations to address climate risks.

“There was a time when APRA opining about climate risk was itself risky, as we faced occasional criticism for not ‘staying in our lane.’ While that view seldom came from the entities we regulate, five years on from our first public comments on climate risk, APRA's view that climate risks are distinctly ‘financial’ in nature – and that many of these risks are foreseeable, material, and actionable now – is well-embedded across the financial sector,” Rowell said.

However, Rowell said Australia has a long way to go to adequately mitigate risks to financial resilience and stability.

“One of our chief challenges is ensuring that all participants in the financial ecosystem – investors, entities, consumers, and regulators – have access to high-quality, reliable, and comparable information,” she said. “While it's barely possible to open a newspaper or attend a business conference without climate risk coming up, the response remains hampered by the lack of information on how these risks will play out over coming years and decades across different industries. And it is on this problem that Australia's main financial regulators are most keenly focused.”

Rowell calls on stakeholders to gather high-quality, reliable, and comparable information to make good decisions regarding addressing climate risks.

She added: “Addressing this challenge is firmly on the minds of regulators, but is not solely our responsibility. This challenge will require engagement, action, and increased transparency from all market participants to ensure the Australian financial system is ready for whatever nature brings in the years to come.”

Aside from releasing Rowell's speech, APRA published Wayne Byres' last speech as its chair after eight years in the role.

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