by Peter Castellas, Chief Executive Officer of the Carbon Market Institute.
Futureproofing Australia from the impacts of climate change is an economic issue of significance.
The potential impacts to Australia from a changing climate, highlighted in the IPCC report released yesterday strengthens the imperative to frame the challenge as an economic issue of critical importance.
The report warns that only “rapid and far-reaching transitions” in energy, land, infrastructure, transport and industrial systems can keep global warming below the internationally agreed target barrier.
It is incumbent on all key economic actors in both the public and private sector to understand the risks and opportunities that the increase in greenhouse gases in the atmosphere present, as the cost of inaction in addressing climate change will increase threats to economic stability and growth.
Australia is vulnerable to economic impacts from climate change including: infrastructure and property risks from increasing extreme weather events; degradation of iconic tourism assets; changing weather patterns impacting agricultural productivity; and stranded assets from locking in carbon-emitting infrastructure. This is coupled with the changing dynamics of international markets, including key trading partners whose carbon-pricing policies and shifting energy mix could impact our energy-intensive trade-exposed economy.
However, there are two sides to the economic equation. On the opportunity side, Australia has the history and depth of expertise in technology innovation, renewable energy, carbon markets, green buildings, financial product engineering, project development, professional services and policy innovation to position the country to participate in new growth markets both domestically and internationally.
We are seeing amongst CMI’s growing membership, businesses that are leading in the investigation of how climate risk can be a key driver of good governance, operational efficiency and strategic planning. A new level of disclosure – driven in part by the commitment to address the recommendations of the Task Force for Climate Related Financial Disclosures (TCFD), responses from APRA, and arecent report from ASIC – is helping to frame climate change as a material risk that warrants executive management and board attention. The institutional investor community, as the major shareholder in most ASX companies, are increasingly interested in how their investments are going to deliver returns in a carbon-constrained world. In summary, an increasing number of decision makers in the business and finance community are attuned to climate risks and opportunities and are taking action.
But it is in Canberra where the ideological battle over climate change must end. The IPCC report particularly targets policy makers and provides more scientific evidence of the increased urgency to drive climate action through policy tools. It is time, in the lead up to the next election, for the major parties to frame the climate battle lines over the best economic pathway to ensure Australia has a climate-resilient economic growth plan.
The IPCC report cannot be ignored.
Our commitment to the Paris Agreement cannot be dismissed.
Challenging decisions cannot be kicked down the road.
Decisive action is needed now by policy makers and business leaders to futureproof our economy.