APRA is set to begin a voluntary survey among its regulated entities, aiming to assess their management of financial risks associated with climate change.
The initiative builds on the foundation laid by APRA’s 2022 climate risk self-assessment survey, reflecting a continued effort to understand and improve industry practices in this critical area.
In a letter to all APRA-regulated entities, John Lonsdale (pictured above), APRA chair, said the survey seeks to enhance both APRA’s and the industry’s grasp of how financial institutions are identifying, assessing, and managing climate-related financial risks.
By leveraging insights gathered against the benchmarks established in APRA’s Prudential Practice Guide CPG 229 Climate Change Financial Risks, the regulator aims to foster a more robust framework for addressing these challenges.
Expanding significantly on its precursor, the 2024 survey will be accessible to a broader range of entities, including those in banking, insurance, and superannuation.
“In addition to providing insights into the management of financial risks arising from climate change, the survey will support incorporating climate-related risks into APRA’s supervisory assessments,” Lonsdale said. “It will also improve comparability, benchmarking and practices within and across industry.”
Designed for efficiency, the survey consists mainly of multiple-choice questions but allows space for participants to provide additional context. This approach not only simplifies the process but also encourages a thorough and nuanced understanding of each entity’s strategies and challenges in managing climate risks.
Participants will have six weeks from receipt to submit their responses, after which APRA plans to share anonymised results for peer comparison. This feedback loop is intended to enhance industry standards by offering insights into collective and individual progress in integrating climate risk considerations into financial risk management frameworks.
“We look forward to your support for this initiative,” Lonsdale said.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
