The Government’s release today of a high quality, comprehensive National Climate Risk Assessment and 15 new national data sets on climate risk is an important step towards getting much-needed private investment into climate adaptation and resilience.
Investors will want to see continued improvement of the National Adaptation Plan, including adequate resourcing for priority actions, and amendments to the Climate Change Act that require key adaptation measures and regular updates to the risk assessment and adaption plan.
Quotes from CEO Rebecca Mikula-Wright
“These climate damages will have significant impacts on investors’ returns. Although the new findings are confronting, the high quality assessment is absolutely necessary, so it’s good to have this released.
“Investors have been crying out for this systemic, nation-wide risk assessment because it starts to get everyone on the one page, and that’s the first step for making good decisions about how to invest to protect our assets, communities, homes, and businesses.
“Anyone looking at this report will realise the urgency and scale of action needed across almost the whole economy, particularly infrastructure, supply chains, and the health and natural systems they rely upon.
“The adaptation plan lays some important and valuable foundations but falls short on committing to the actions needed to protect Australia’s assets and economic growth.
“It’s crucial to update the Climate Change Act to require regular updates to the risk assessment and adaptation plan. That would lock in continued improvement from today’s start.
“Future policy and the next federal budgets should factor in adaptation priorities and opportunities.
“Australia will also need a comprehensive plan for activating private investment into adaptation.
“The Investor Group on Climate Change has been the leading voice articulating how a high-quality National Climate Risk Assessment and National Adaptation Plan can stimulate private investment in adaptation.
“We will keep providing investors’ input as the government and public service builds on today’s releases.”
The National Adaptation Plan provides a framework for future actions but falls short of crucial commitments to legislate requirements for regular updates to the National Climate Risk Assessment and National Adaptation Plan. The Plan does not include any new resourcing towards an action agenda, expected by the end of 2026.
Investors’ Recommendations for the Government:
- The Climate Change Act must be amended 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.
- Provide immediate resourcing in MYEFO for key actions, including for:
- developing an economic and actuarial model to identify adaptation policy interventions with the highest economic benefit.
- co-developing an adaptation finance strategy and plan with Treasury to attract private investment into priority adaptation and resilience projects.
- 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
- expand the Australian sustainable finance taxonomy to include adaptation and resilience.
- Commit to developing, 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
- The mandates of all specialist investment vehicles (SIVs) – not just the CEFC – should 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.
- The government should invest in sovereign scientific capability and resources, including robust, high-resolution climate and hazard datasets and five-year scientific plans.
- Governments should review and update relevant regulations, including the National Construction Code, town and land use planning, so they consider resilience over the full expected life of effected assets.
Recommendations for Investors
- Investors should fully integrate the information in the National Climate Risk Assessment and 15 new national datasets into their investment processes, including risk management, scenario analysis, and economic modelling.
- Investors should align their portfolios to the national resilience objective and plans, through target-setting and continuing progress.
- Investors should rapidly build expertise in understanding and managing risks of climate-related damage and disruption.
More recommendations and analysis can be found in IGCC 2024 paper: Activating Private Investment in Adaptation: Turning Capital Flight Risk Into the Next Multibillion Opportunity