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APRA says climate change already poses “system-side” financial risks

AAP Image/Dean Lewins, File

Australia’s premier financial regulatory body has delivered a stark warning to the country’s politicians, saying that climate change already poses “system-side” financial risk, and not enough is being done about it.

The warning was given by the Geoff Summerhayes, a former head of Suncorp and now a board member of the Australian Prudential Regulation Authority. It echoed similar warnings delivered by Bank of England governor Mark Carney in recent years and work by the Financial Stability Board.

“While climate risks have been broadly recognised, they have often been seen as a future problem or a non-financial problem,” Summerhayes said in a speech to the Insurance Council of Australia Annual Forum.

“The key point I want to make today, and that APRA wants to be explicit about, is that this is no longer the case.

“Some climate risks are distinctly ‘financial’ in nature. Many of these risks are foreseeable, material and actionable now. Climate risks also have potential system-wide implications that APRA and other regulators here and abroad are paying much closer attention to.

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