In response to the release of climate change scenarios and an inquiry into the potential macroeconomic impacts of climate change by global central banks, working through the Network for Greening the Financial System, Chief Executive Officer of the Investor Group on Climate Change, Emma Herd, said:
“These scenarios prepared by the world’s central banks, including the Reserve Bank of Australia, clearly demonstrate climate change is a systemic economic threat that will significantly undercut our prosperity and job security.
“Financial regulators are now responding to this economic risk, as are institutional investors who are increasingly wary of carbon-intensive assets and looking for opportunities that will accelerate the net-zero emissions transition
“A transition is inevitable. Early action reduces the cost of the transition to net-zero emissions by 2050 substantially and helps avoid severe and irreversible impacts from climate change itself.
“In Australia, this will require a stable long-term policy framework and a commitment to net-zero emissions by 2050. The alternative is sitting on our hands which will continue to expose Australia to decarbonisation efforts across the world while not gaining access to new opportunities that will stem from modernising the economy.
“These scenarios will underpin efforts by the Reserve Bank of Australia and financial supervisors to provide a consistent basis for companies to disclose their climate risk exposure. Companies should no longer be able to cherry pick climate scenarios that suit their preferred business strategy and instead make clear climate risk assessments that allow investors to determine their true value.
“Governments should also apply these climate scenarios to their own policy decisions, including COVID-19 economic recovery efforts, to ensure taxpayer expenditure is not put at risk by locking in support for carbon-intensive activities.”