The Australian Prudential Regulation Authority (APRA) has released draft guidance to banks, insurers and superannuation trustees on managing the financial risks of climate change. The draft is open for consultation.
Chair of APRA, Wayne Byres said the Authority’s Prudential Practice Guide (PPG), CPG 229 Climate Change Financial Risks (CPG 229), would assist APRA-regulated entities to manage climate-related risks and opportunities as part of their existing risk management and governance frameworks.
“APRA has developed CPG 229 in response to requests from industry for greater clarity of regulatory expectations and examples of better industry practice,” Mr Byres said.
“The guidance covers APRA’s view of sound practice in areas such as governance, risk management, scenario analysis and disclosure,” he said.
“The PPG does not, however, create new requirements or obligations, and is designed to be flexible in allowing each institution to adopt an approach that is appropriate for its size, customer base and business strategy.”
Mr Byres said it was important that APRA-regulated entities were prepared to respond to financial risks, whatever form they took.
“The Prudential Practice Guide doesn’t direct or prevent APRA-regulated entities making any particular business or investment decision,” he said.
“Rather, it is aimed at ensuring decisions are well-informed and appropriately consider both the risks and opportunities that the transition to a low carbon economy creates.”
Mr Bryes said APRA would accept feedback on the draft Guide from stakeholders until 31 July and had released an accessible version of an infographic setting out CPG 229’s key areas of consideration.
Information on APRA’s 18-page CPG 229, including how to have a say, can be accessed at this PS News link and the infographic at this link.
