The Australian Prudential Regulation Authority (APRA) has published the findings of its second climate risk self-assessment survey into how regulated entities identify, manage and disclose the financial risks of climate change and align their practices with the Prudential Practice Guide CPG 229 Climate Change Financial Risks.

For climate risk, APRA seeks to ensure that regulated entities manage climate risks prudently and effectively.

It concluded that while larger entities have continued to improve their climate risk maturity on average, broad variations remain. Smaller entities generally reported lower climate risk maturity.

Other key insights from the results include:
• The average level of climate risk maturity for large banks has improved since 2022, while it is broadly unchanged across large insurers and superannuation trustees.
• Areas of strength were ‘governance and strategy’, as well as ‘risk management’. Entities did not perform as well on ‘disclosure’ or ‘metrics and targets’.
• More mature governance structures are typically in place at entities where climate risk has been integrated into risk management.
• Entities are starting to consider adjacent risks and practices such as nature risk and transition plans.

APRA will consult on amending Prudential Standards CPS 220 and SPS 220 Risk Management to include climate risk in 2025.   

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.