Climate Measurement Standards Initiative

Reducing risks & costs

of climate-related disclosures for insurers, asset owners and banks, consistent with the TCFD

Providing scientific advice

on approaches, methods, assumptions, and data for estimating future costs that are disclosed

Developing a shared understanding

of climate science, impacts on extreme events and data requirements

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Initiative objectives

Provide consistent and comparable financial disclosure guidelines under TCFD recommendations for producers and users of such guidelines.
Develop reference scenarios that provide relevant details on the recommended climate models and climate impacts for extreme events.
Support wider disclosure of climate change scenarios by the banking, insurance and asset owner sectors in Australia.
Develop a framework for consideration by regulators, governments and other stakeholders to support the assessment of disclosures and financial stability.
Present a roadmap for future research and development aligned with disclosure requirements.

Why is this initiative needed?

The Task Force on Climate-related Financial Disclosures (TCFD), launched in 2015 by the Financial Stability Board is quite broad in its guidance on how to assess and disclose climate-related risk. This has the potential to lead to disclosures which are not comparable, consistent or aligned across reporters and to crucial Australian factors. The Climate Measurement Standards Initiative (CMSI) was formed to bridge this gap for asset owners, banks, insurers and traders of private and residential property in Australia, and for institutions whose role it is to oversee financial and community stability.

The CMSI is a first step to providing Australia a common understanding of financial disclosures regarding future damage to residential and commercial properties by climate-related phenomena.

How will the Initiative fill this gap?

As an industry-led collaboration between insurers, banks, scientists, regulators, reporting standard professionals, service providers and supporting parties, the Climate Measurement Standards Initiative (CMSI) will increase/build confidence by providing standards for disclosure.

The project will integrate the disciplines of climate science, hazard science, catastrophe modelling and financial modelling to provide a set of open source standards for the disclosure of climate-related physical risks for companies with financial interests in physical assets, including residential and commercial buildings or other infrastructure in Australia.

These voluntary standards will be:

comparable between insurers, banks and asset owners,
supported by scientific evidence and advice from Australia’s leading climate experts,
provide guidance for program developers, model vendors and service providers to provide advice to the industry, thereby removing the “black box” problem,
enable widespread adoption and
focus R&D on what is actually needed.

There will be three parts to these standards, which will provide meaningful and practical regulation: financial disclosure guidelines, scientific guidelines and three reference scenarios.

Who we’re working with

The initiative is being coordinated by a steering group led by Climate-KIC Australia, the National Environmental Science Program, Earth Systems and Climate Change Hub and a group of industry partners, these include: QBE, Suncorp, IAG, RACQ, National Australia Bank, Westpac, Commonwealth Bank of Australia, HSBC Australia, Munich-Re, Swiss-Re, Leadenhall CP, MinterEllison and Investor Group on Climate Change.

All information developed will be published under an open source licence by Climate-KIC Australia in 2020.