While the major parties continue to battle over climate policy in Canberra, the Australian Prudential Regulation Authority (APRA) has written to all the entities it regulates encouraging the adoption of voluntary frameworks to assist with dealing with climate change and has foreshadowed developing a climate risk practice guide.
The regulator said many industry participants had indicated they would like APRA to provide more information on better industry practice in relation to climate-related financial risks, as well as greater clarity on regulatory expectations.
“In response, APRA intends to develop and consult on a climate change financial risk prudential practice guide (PPG),” it said. “This industry guidance is not intended to establish new obligations, but rather will be designed to assist entities in complying with their existing prudential requirements, including those found in Prudential Standard CPS 220 Risk Management.”
APRA said the cross-industry PPG, relevant to all entities, would set out APRA’s views on better practice and outline prudent practices in the area.
“The PPG will cover areas relevant to the prudent management of climate change financial risks, aligned with the recommendations of the TCFD, including aspects of governance, strategy, risk management, metrics and disclosure,” it said.
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