Australian news, and some related international items

While the Australian government slumbers on, business takes lead on climate disasters

With actuaries warning that some properties could become uninsurable in future, land values in some areas would likely plummet.

“The possibility of legal liability heightens risks for companies that aren’t responding”

While the financial sector is now seriously factoring the practical impact of climate change into their plans, many within it fear government is not.

Business takes lead on climate disasters, In the wake of cyclone Debbie, the insurance and banking industries are pushing for better mitigation measures, while the federal government lags behind. By Karen Middleton, Saturday Paper 8 Apr 17, “……..The Cannons and their neighbours join the residents of Murwillumbah, Lismore and other affected areas of NSW and Queensland in surveying the damage from cyclone Debbie, and the storms and flash flooding of its aftermath, and asking what can be done to help communities protect themselves in future.

The same questions are being asked in the boardrooms of corporate Australia – especially but not only in the finance sector – with an increasing emphasis on planning for and guarding against such events, rather than just cleaning up afterwards.
…….The Insurance Council of Australia wants the federal government to focus on mitigation as a priority in the upcoming federal budget.

“Cyclone Debbie and the floods that followed it should be a starting point for state and federal governments to address mitigation,” council spokesman Campbell Fuller said.

In the insurance and superannuation industries, work is being done on the likely longer-term impact of climate change on the frequency and ferocity of these major disasters and how they and other investors – and ultimately governments – should respond.

The big banks have also begun studying the implications of climate change on their risk exposure through mortgages reaching back 30 years.

ANZ bank chief executive Shayne Elliott told a federal parliamentary committee last month that his bank was examining how its investments would be affected, including in housing.“We’ve done actually quite a bit of work around the impact of climate change in the broadest sense, in terms of weather and what that does to Australia in particular, and tried to assess our risk, if you will, about lending, and having customers in certain parts of the country,” Elliott said.

He said in relation to housing, rising water levels were the biggest concern.

The findings of these and other studies are likely to affect househunters hoping to borrow, buy or build in areas not at risk currently but that will possibly be at risk in future, along with the local councils, developers and banks that will decide if they can proceed. They will also affect investors in industries deemed to contribute to climate change and the directors of companies faced with climate-related advice.

Househunters complain they don’t always have access to information on the longer-term risk facing particular properties and can end up facing exorbitant insurance premiums after they buy.

The Insurance Council insists home owners can always get some form of insurance but acknowledges they pay according to risk and the higher the risk, the higher the price.The director of risk-rating company Climate Risk, Dr Karl Mallon, says detailed data exists on which areas are likely to be most in danger from flood, cyclone damage and other natural disasters. It’s just not being made available to prospective buyers.

This week, he challenged the Insurance Council of Australia to provide the geographical risk data available through local councils, saying he would turn it into an online tool for prospective home buyers.

“The thing I think is really lacking here is that ordinary mums and dads do not have access to that and they don’t have the ability to make a decision based on insurability,” Mallon told ABC Radio National. “So they get a surprise when they get a multi-thousand-dollar insurance bill, but they get it after they’ve bought the house.”

The council said it would be willing to share the information. But all acknowledge that kind of information could have serious implications for the housing market.

With actuaries warning that some properties could become uninsurable in future, land values in some areas would likely plummet. And with local councils deriving much of their income from rates based on those values, there is a disincentive to make the information available.

In February, the Australian Prudential Regulation Authority belled the need for Australia’s corporate sector to also be better informed about and equipped for the impact of dramatic weather events and, more specifically, climate change.

In a speech to the Insurance Council of Australia’s annual forum in Sydney, APRA executive board member Geoff Summerhayes said climate change was no longer seen as a future, non-financial problem.

“Many of these risks are foreseeable, material and actionable now,” he said.

Summerhayes outlined two types of risk for business: the physical risk associated with the damage disasters inflict on property, resource availability and supply chains; and the “transition” risk as government policies, law, technology and the rules of markets adjust to a low-carbon economy.

Summerhayes suggested that while physical risks were obviously important, the longer-term impact was in the transition. He cited a legal opinion prepared late last year by Noel Hutley, SC, for the Centre for Policy Development and the Future Business Council, which found that company directors could be held personally liable in a legal sense if they were found to have failed to properly consider and disclose climate-related risks to their business.

“The possibility of legal liability heightens risks for companies that aren’t responding,” he said……..

While the financial sector is now seriously factoring the practical impact of climate change into their plans, many within it fear government is not.

Specialising in the impact of climate change, Deloitte’s Sharanjit Paddam is among them.

“Business has got it,” Paddam said. “Society has got it. State governments are getting it. It’s just federal government that doesn’t seem to get it at the moment. [It] seems to be acting just like Kodak. It’s clinging to film, whilst business and society have moved on to digital cameras. It just hasn’t figured out that there’s a better, cleaner and cheaper product out there.”………

Heavyweight corporate lobby groups are springing up to press for action.

The Investor Group on Climate Change, comprising institutional investors collectively managing $1 trillion in funds, has formed to examine the “risks and opportunities” associated with climate change that will affect financial returns.

The group aims to improve disclosure of climate-related financial information. It’s urging a range of stakeholders, including government, to sit down together to discuss mitigation and adaptation of existing infrastructure.

Government remains the hardest to corral.“It is striking that we haven’t done a national assessment of economic infrastructure at risk from climate change since 2012,” says the group’s chief executive, Emma Herd. “Investors are out there doing it. There’s no national framework for how to do that, there’s no national map of where to do it. Everybody has a role to play but it’s not helpful to continue finger-pointing. What the investment community is looking for is a pathway forward.”

The group has little time for those in politics still arguing about whether they believe in climate change.

“Investors believe in it and they are voting with their money,” Herd says.

Mara Bun, who chairs the Gold Coast Waterways Authority and is a director of several companies involved in renewable energy and ethical investments, agrees.

“I’m here to tell you that there is definitely an absent player,” Bun says. “If you go through the Infrastructure Australia priorities there is not a single mention of the need for mitigating or preventing the impacts of climate change.”……..

Now Lismore’s residents and those who live in flood-prone areas up and down the east coast – including Carole and John Cannon – are counting the human, infrastructure, financial and emotional cost of inadequate measures to protect from the wrath of Debbie and talking about how to prevent a repeat.

Corporate Australia is urging those sitting around the cabinet table in Canberra to do the same.


April 8, 2017 - Posted by | AUSTRALIA - NATIONAL, business, climate change - global warming, politics

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