ANZ says it is starting to pay attention to the climate risks related to its housing loans. Photo: James Alcock/ Getty Images
The great bulk of Australia's largest listed companies are failing to disclose their exposures to climate change even as regulators – and some of the big banks – are beginning to act...
Video: Australia's fossil-fueled summer... Eastern Australia experience an unprecedented heat wave this summer as evidence linking climate change with burning fossil fuels grows ever stronger. Courtesy ABC News24.
Of the top 200 ASX-listed companies, 167 leave large gaps in their disclosures such as omitting strategies on how they plan to deal with climate-related threats, Emma Herd, chief executive of the Investor Group on Climate Change, told a Senate inquiry hearingin Sydney.
"Only about 40 per cent of them publicly acknowledge climate change as a risk," Ms Herd said, citing figures from a survey done in collaboration with 35 super funds with $450 billion in assets. Disclosure in Australia "is still low [versus other nations], and compared to where it needs to be".
The hearing into carbon risk comes a day after major banks were grilled by a separate House economics committee, with ANZ's chief executive Shayne Elliott saying his bank had recently extended its review of climate risks from sectors such as agriculture to its mortgage business.
"It's about rising water levels essentially, as a bank lender, that's probably where we have the greatest risk," Mr Elliott said, adding the assessment would include loan-to-valuation ratios.
"When a big four bank says it might not give someone a mortgage because rising sea levels will flood their house, it's a huge wake-up call that climate change might smash the Australian economy," Greens MP Adam Bandt said.
The focus on climate risks, particularly for the financial sector, has intensified in recent weeks following a speech by Geoff Summerhayes, an executive board member of the Australian Prudential Regulation Authority, in which he declared them to be "foreseeable, material and actionable now".
The threats "include the potential exposure of banks' and insurers' balance sheets to real estate impacted by climate change and to re-pricing (or even 'stranding') of carbon-intensive assets in other parts of their loan books", Mr Summerhayes said.
Mr Summerhayes told Fairfax Media on Wednesday he had noted Mr Elliott's comments on ANZ's new approach to home loans, adding: "It would appear to be a prudent thing to be doing."
APRA and another regulator, the Australian Securities and Investments Commission, made submissions to the Sydney Senate inquiry, although neither indicated when regulations are likely to be tightened soon other than through providing guidance.
Many coastal properties are exposed to wild weather – that is expected to get wilder
. Photo: Dean Lewins
"Whilst APRA are now telling the entities they regulate to 'consider' the risks from climate change and the transition to a low carbon economy, it isn't clear how they will monitor if the message has been received and acted upon, and how effective this strategy will be in reducing potential financial system instability," Greens Senator Peter Whish-Wilson said after Wednesday's session.
Jenny McAllister, a NSW Labor senator and chair of the carbon risk inquiry, said "APRA have launched a shot across the bow of government but there has been no clear response on how regulators should respond to carbon risk."
"The corporate regulators are clearly working in a vacuum," she said. "It can't be easy setting climate change direction when senior members of cabinet don't believe in it."
IGCC's Ms Herd said only 36 of the top 200 ASX companies publicly report on climate-related targets. Of the top 200, 106 have to report on greenhouse gases – but little else, she said.
The bank chiefs attending the House committee said mostly said they had read "excerpts" of Mr Summerhayes' speech.
Ian Narev, Commonwealth Bank's chief executive, said the nation's biggest mortgage lender was not taking into account sea level changes "that I'm aware of at this stage". He added, though, the bank's loan exposure to renewable energy was $2.3 billion, or five times that of coal.
Brian Hartzer, Westpac's head, when asked whether his bank may halt lending to new coal ventures in order to keep to its committed climate goals, answered: "Yes, it may come to that point."
March 8 2017
original story HERE
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