Global investors and policy makers are closely watching Australia’s climate change policies, according to the governor of the Reserve Bank of Australia (RBA).
Following a speech to the Anika Foundation on Tuesday, Philip Lowe responded to a question about what lessons can be applied from the Covid crisis in the context of climate change. He warned that investors are “increasingly applying a climate filter to their decisions”, and the cost of capital will go up if Australia does not respond accordingly.
“I get a lot of questions both from other central banks and by investors about climate change, Australia’s preparedness for climate change, how our capital markets are evolving, and how government policy is evolving.” Lowe said. “There’s a great deal of interest globally in our approach to climate change.”
Lowe’s remarks follow a speech by ARB deputy governor Guy Debelle outlining the work on sustainable finance being carried out by the Executives’ Meeting of East Asia-Pacific Central Banks, a forum for central banks in the East Asia and Pacific region.
Debelle pointed to climate risk assessments, green taxonomies and the development of green finance, including the promotion of investment in green bonds through the Asian Bond Fund. He also identified challenges surrounding a lack of data, and the long time horizons involved in climate stress testing and scenario analysis.
Australia is currently experiencing the worst drought in 400 years and is highly vulnerable to the impacts of global heating. The country is also a major coal producer and has one of the highest levels of per capita greenhouse gas emissions in the world.
An HSBC report in 2018 assessed the climate risk exposure of 67 countries and found that business operations and logistics were highly vulnerable to predicted increases in the number and intensity of storms, floods, rain and bushfires.
It also found that Australia is already experiencing the largest percentage rise in deaths attributable to climate change in the developed world.
This page was last updated September 21, 2021
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