David Littleproud
David Littleproud (Image: AAP/Mick Tsikas)

In another sign of how the real world is rapidly undermining the fantasies of the climate denialists in the Morrison government, the government's own prudential regulator has directed financial institutions to elevate their recognition of climate change risks given the threats' "irreversible" and "unprecedented" nature.

The Australian Prudential Regulation Authority (APRA) yesterday released a draft guidance on managing climate change risks for banks, insurers and superannuation funds on the basis that "the financial risks associated with climate change have a number of elements that distinguish them from other financial risks, and necessitate a strategic approach". These include the "the potential for irreversible changes", "the far-reaching impact that climate risks pose" and "the unprecedented nature of climate change".

The draft guidance doesn't create new requirements or obligations. But as APRA chair Wayne Byres said, "since the Australian government became a party to the Paris Agreement, APRA has been raising awareness of climate-related risks to the financial sector. Given the unique and long-term nature of the risks, however, processes to measure, monitor and manage climate-related financial risks are still developing."