In September 2025 Australia released its first National Climate Risk Assessment (NCRA) and National Adaptation Plan (NAP) — two landmark documents that will shape how government, business, and investors understand and respond to physical climate risks.
They map Australia’s vulnerabilities, but also highlight the urgent need for stronger commitments and clearer pathways to action.
IGCC believes that investors and advisors who absorb and use this information will be at a competitive advantage to those who don’t.
Likewise, if investment decision-makers are getting advice that is inconsistent with this data, they may want to ask why.
IGCC’s Director of Communications and Climate Resilience, Fergus Pitt, is joined by our Senior Manager of Climate Resilience, Kate Simmonds and Executive Director of Policy, Frankie Muskovic, to break down what it all means for investors.
Listen to our audio briefing.
A High-Quality Risk Assessment
The National Climate Risk Assessment (NCRA) is a comprehensive, nearly 300-page document supported by 15 technical reports. it provides a rigorous, credible, and high quality examination of risks across eight key systems:
- Aboriginal and Torres Strait Islander people
- Communities – urban, regional and remote
- Defence and national security
- Economy, trade, and finance
- Health and social support
- Infrastructure and the built environment
- Natural environment
- Primary industries and food
Importantly, the report also considers intersections between systems — how risks in one area cascade into others. For example, climate-driven infrastructure disruption can undermine economic performance, affect community wellbeing, and ripple into financial stability.
The inclusion of indirect impacts — such as the social cost of infrastructure failure — marks a major step forward in how physical risk is understood.
Where investors should focus
Three chapters stand out for investors (while acknowledging the interconnectedness of the whole economy):
- Economy, Trade and Finance — which includes a focus on the real economy and identifies the financial system as a transmission channel for risks and a lever for resilience.
- Infrastructure and the Built Environment — highlighting critical vulnerabilities in energy, telecommunications, water, and transport systems.
- Primary Industries and Food — addressing exposure of agriculture and supply chains to climate shocks and chronic impacts.
For investors, the infrastructure chapter is particularly valuable. It identifies critical assets at risk but also begins to quantify indirect impacts, such as the costs of disruption.
This provides a foundation for more defensible physical risk assessments and prioritisation of investment.
The Risk Assessment and Financial Disclosures
The assessment provides a useful benchmark in the new era of mandatory climate-related financial disclosures.
Companies’ physical risk assessments can now be measured against a The Australian Climate Service’s science-based reference point, raising the bar for credibility and comparability.
Health and Nature: High Risk Systems That Investors Rely On
There are also confronting findings on the natural environment and human health. These broaden investors’ focus on the “hard” economy such as primary industry and infrastructure.
- Health risks escalate sharply without stronger adaptation, with implications for labour productivity and economic resilience.
- Impacts on ecosystems — forests, biodiversity, and natural assets — are stark, with limited adaptation options.
For investors, this underscores the interconnectedness of natural, human, and financial systems. Economic stability and investment performance are inseparable from the wellbeing of people and ecosystems.
The Adaptation Plan: A Framework, Not Yet a Roadmap
If the NCRA is the strong foundation, the National Adaptation Plan (NAP) is more modest. IGCC welcomes its release, but it’s more of a plan for a plan.
The NAP includes:
- Principles for prioritising future action
- A stocktake of current adaptation efforts
- Potential activities across the NCRA’s eight systems
But it lacks firm commitments. There are no legislated requirements for regular updates, no clear timelines, and no flagship actions with funding attached.
The government’s timetable for working with states and territories on an adaptation action agenda runs out to 2026 — far too slow given escalating risks.
Next Steps for Investors
We recommend that investors;
- Absorb the relevant information in the NCRA and NAP,
- Ensure that investment teams are aware and factoring it into their investment cases and plans.
- Have conversations with service providers about how they will incorporate the intelligence into their models and advice.
- Incorporate the information into their engagements with companies in their portfolio.
We have several projects in flight that complement the NCRA and NAP, designed to help investors:
- Guidance for infrastructure investors: IGCC’s Real Assets Sub-Working Group is developing a defensible risk assessment framework to improve how infrastructure resilience is evaluated and managed.
- Corporate engagement physical risk working group: The updated Investor Expectations on Physical Risk and Resilience will be released at the IGCC Summit, including case studies and illustrative examples. Australia’s mandatory climate reporting standard requires disclosures of physical risks and what companies are doing. The next step is giving investors tools to prompt action and assess the credibility of these disclosures.
- The IGCC Summit: Featuring dedicated panels on physical risk and adaptation. Register here.
- Physical Risk Masterclass on October 30: This will give members the opportunity to interrogate the NCRA, discuss with experts and peers how to apply it to their portfolios, and provide feedback on what additional resources they need.
Advocacy Priorities for IGCC
IGCC will focus on ensuring these documents evolve into living, actionable frameworks. Key advocacy priorities include the government:
- Amending The Climate Change Act with requirements to regularly update the National Climate Risk Assessment and National Adaptation plan, putting adaptation on-par, in impact and prominence with the Net Zero plan.
- Resourcing in MYEFO for key actions, including for:
- co-developing an adaptation finance strategy and plan with Treasury
- developing an economic and actuarial model to identify adaptation policy interventions with the highest economic benefit.
- working with Treasury to finance eligible government funded climate adaptation projects through Green Treasury Bonds.
- updating the Clean Energy Finance Corporation (CEFC) Investment Mandate Direction requiring the CEFC to consider physical climate risk and co-benefits of adaptation and resilience
- expanding the Australian sustainable finance taxonomy to include adaptation and resilience.
- Committing to develop, as part of the action agenda and future updates to the National Adaptation Plan:
- a national objective for resilience, plus plans for key sectors.
- a clear list of priority adaptation projects (e.g., the Infrastructure Priority List).
- more comprehensive adaptation plans for key sectors
- Updating the mandates of all specialist investment vehicles (SIVs) – not just the CEFC – to expressly include adaptation and resilience (other key SIVs include Housing Australia, the National Reconstruction Fund Corporation, Northern Australia Infrastructure Facility, Regional Investment Corporation, and Australian Renewable Energy Agency). SIVs have historically stimulated private investment alongside public funds.
- Investing in sovereign scientific capability and resources, including robust, high-resolution climate and hazard datasets and five-year scientific plans.
- Reviewing and updating relevant regulations, including the National Construction Code, town and land use planning, so they consider resilience over the full expected life of effected assets.
Conclusion
For investors, the message is clear: use the NCRA as both a resource and a yardstick. Engage with companies, test assumptions, and identify priority risks in portfolios.