Sydney, 2nd June 2020 – Representatives of some of Australia’s largest insurers, banks, investors, standards bodies and service providers have joined forces with leading scientists and researchers in a ground-breaking new initiative to develop standards for climate physical risk projections.
“For the first time, leading Australian experts in both physical climate change science and disaster modelling are working together with Australian financial institutions to provide a scientifically robust, common standard for industry disclosure and reporting of climate-related financial risks in Australia,” said Christopher Lee of Climate-KIC Australia.
“This will provide companies and regulators with a common understanding of the science and how model-based projections of climate variables can be integrated into physical risk scenario analysis.”
This project is supported by some of Australia’s largest financial service sector companies, industry associations and standards bodies. Preeminent scientists from the CSIRO Climate Science Centre, Bureau of Meteorology, and leading universities under auspices of the National Environmental Science Program’s Earth Systems and Climate Change (ESCC) Hub, working in collaboration with the Centre of Excellence for Climate Extremes (CLEX), are also contributing to development of the framework.
“A common Australian standard for performing physical climate scenario analyses will help provide investors and other users of climate-related disclosures with an improved level of comparability and an understanding of the scientific uncertainty in the data used as a basis for their climate-related disclosures, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD),” said Lee.
The Climate Measurement Standards Initiative (CMSI) will create a common understanding of the physical risks from climate change in Australia as well as providing projections for future repair and replacement costs of residential and commercial buildings and infrastructure.
The CMSI is specific to Australian conditions, using peer-reviewed research from Australian and international scientists to support the work of financial institutions. Australia has been strongly affected by the increasing severity and frequency of climate-related natural disasters. The resulting risks manifest in many ways from more local flooding, increases in extreme weather events, severe bushfires, prolonged drought and torrential rains and storms.
The CMSI complements the work of the Australia Sustainable Finance Initiative and the United Nations Environment Programme Finance Initiative banking and insurance TCFD pilots.
Work on the CMSI began in November 2019. The voluntary standards developed will be: comparable between insurers, banks and asset owners; supported by scientific advice from Australia’s leading climate experts; provide guidance for developers, model vendors and service providers to provide advice to the industry; enable widespread adoption and focus research and development where it is needed.
There will be three parts to these voluntary standards, which will provide meaningful and practical guidance: financial disclosure guidelines, scientific guidelines and three application reference scenarios.
A draft voluntary standard will be available for initial stakeholder consultation by July 2020.
The CMSI is being coordinated by a steering group led by Climate-KIC Australia, and industry partners, supported by the ESCC Hub. All information developed will be published under an open source licence by Climate-KIC Australia in 2020.
The CMSI is being funded by industry participants, with in-kind support from the ESCC Hub and CLEX. Representatives across the sector are participating in the governance committees to develop the guidance and standards.
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For media enquiries please contact:
Christopher Lee, CEO – Climate-KIC Australia | firstname.lastname@example.org | +61 (0) 457 836 694
“For the first time, leading Australian experts in both physical climate change science and disaster modelling are working together with Australian financial institutions to provide a scientifically robust, common standard for industry disclosure and reporting of climate-related financial risks in Australia. This will provide companies and regulators with a common understanding of the science and how model-based projections of climate variables can be integrated into physical risk scenario analysis.”
CEO, Climate-KIC Australia
About the CMSI
The Climate Measurement Standards Initiative (CMSI) is co-ordinated by Climate-KIC Australia and draws its members from across the Financial System. Funders and Supporters of the project include: QBE, IAG, Suncorp, RACQ, National Australia Bank, Commonwealth Bank of Australia, Westpac, HSBC, Munich Re, Swiss Re, Leadenhall CP, Investor Group on Climate Change and MinterEllison. The project is supported by the Earth Systems and Climate Change (ESCC) Hub and its partner organisations.
About Climate-KIC Australia
Climate-KIC Australia is a knowledge and innovation community that aims to inspire and enable climate action by being a catalyst for systemic change, through innovation. Born out of a collaboration with EIT Climate-KIC, Europe’s largest public-private partnership focused on climate change, Climate-KIC Australia specialises in supporting on-the-ground innovation to catalyse system change. We establish links between research, business, entrepreneurs, investors and government to drive transformational projects that unlock change at the speed and scale the climate challenge needs.