Australia in ‘climate denial’: Calls for business and banking sectors to make urgent changes

Power lines, power plant and wind turbine at sunset.

Finance and business sectors are being urged to fast-track emission reduction efforts after the latest Intergovernmental Panel on Climate Change (IPCC) report. It found current measures will not be sufficient to keep global warming at bay in line with targets.

The new report from Melbourne-based climate restoration think tank, Breakthrough, says Australia’s policymakers still prioritise short-term financial gain through a high-carbon economy, with ‘climate denial and delay’ dominating decision-making. 

Overall, the report suggests national and global targets for emission reductions are based on modelling which doesn’t adequately represent risks associated with rising temperatures. 

In April, the Australian Prudential Regulation Authority (APRA) released draft guidance to banks, insurance companies and super funds on managing the financial risks of climate change. It gave two potential scenarios for companies to consider in their own climate risk frameworks – one where temperatures rose to 4°C over the next 70 years and one where temperatures rose by 2°C or less, in line with the Paris Agreement.

Breakthrough’s report points out that even the increase of 2°C could represent extremely dangerous climate change. 

In his foreword in the report, former UK chief scientific advisor David King said, “3°C – 4°C warming is a threat not just to the banking system, but to the very survival of human civilisation. It is beyond adaptation, and achieving net zero emissions by 2050 is far too late.”

The report suggests macro-scale intervention, which steers not just institutions but entire industries and global policies, is necessary to avoid massive financial and societal climate-related risk. 

But in this discussion of global proportions, how might an individual Australian play a positive role?

How to use your finances to support sustainable economic development

The financial institutions that hold or manage your money will have investments across a huge portfolio of industries and companies, which may be negatively or positively impacting climate change. 

Essentially, your savings account, superannuation and any loans you take out can contribute to financing sustainable or unsustainable economic activity. Similarly, the companies you buy products from will have varying environmental footprints and economic interests, so seeking out sustainable shopping options is another step in the right direction.

If you’d like to learn more about ethical finance, read-up on the rise of B Corps, or check out the dedicated sustainable banking season of The Finance Burrito podcast.