Speech at Commonwealth Bank's Momentum: Accelerating Australia’s Transition conference

E&OE SPEECH
COMMONWEALTH BANK MOMENTUM
ACCELERATING THE TRANSITION
TUESDAY, 12 MARCH 2024

I want to acknowledge the fact that this is the land of the Gadigal people and I pay my respects to their elders past, present and emerging.

I want to thank the Commonwealth Bank for putting on Momentum. And I want to thank all of you for being here.

I have worked in climate and energy over the past two decades – in policy development at the NSW government, consulting with businesses at AECOM, and now as a minister.

My observation is that our best chance at making progress on sustainability is building a broad coalition for change. It’s one of the reasons our government has tried to undo the damage of the last decade and move past the Climate Wars.

And its why I’m so grateful to see all of you here today – thinking about the contribution you and your enterprises can make.

This summer the weather has once again been more than just a topic for small talk. It’s been a prompt for big questions. Australians are wondering aloud if this is what it will be like to live in a warmer world.

What we’ve seen reflects what scientists predicted a hotter climate might deliver. And 2023 was officially the hottest year on record.

We need ambitious action to limit carbon emissions and limit warming. That’s why the Australian government has set a strong emissions reduction target at home, and continues to argue for coordinated action abroad.

But Australia also needs to think about what we can do to limit the impact of climate change on our economy, our communities, and our natural environment.

The global community is aiming to keep warming as close to 1.5 degrees as possible.

Scientists tell us that a 1.5 degree world will look and feel different from today. Some impacts of climate change are now locked in and unavoidable.

Adapting to climate change means asking ourselves – what will it take to be ready for these impacts?

The first step is to understand the risks that Australia faces. Like so much else, we are playing catch up because of the lost decade of climate policy. The UK has already completed their third national climate risk assessment and implemented the findings into a national program of action.

The former Coalition government refused to listen to the experts. We have brought experts together to help produce Australia’s first ever evidence-based National Climate Risk Assessment.

We are releasing the initial phase of that work today. It describes risks that are broader than many might imagine – this is more than bushfires and sea level rises.

Summers with more extremely hot days could see more railway tracks buckling, outdoor worksites shutting down, and heat threatening people’s health – particularly the elderly and the very young.

Shifting rainfall patterns could see less water in some agricultural communities that depend on it, and more downpours in some urban communities which weren’t built to handle it.

The report we released today describes the risks but doesn’t put numbers against them. Over the course of this year the government will be working with scientists and experts to complete a second, more detailed examination of some of the most serious of these risks.

Responding to these risks will be a big task for Australia over the coming years.

The Albanese Government has already gotten started. We’re partnering with states and territories and councils through our flagship Disaster Ready Fund, investing nearly $400 million in joint funding in the last year alone to build flood levees, fire breaks, better drainage and evacuation centres.

We’re working with the finance sector as part of the Hazard Insurance Partnership to address rising insurance premiums, help communities be better prepared for disasters and better target mitigation.
Collaboration is going to be key to our ability to respond to climate risk.

That is why the government is currently developing Australia’s first National Adaptation Plan to lay out a framework for governments, local councils, businesses, communities and individuals to work together.

Luckily we’re not starting from zero. While the Coalition spent the past decade of government with its head in the sand, the Australian business community was quietly getting on with the work.

The truth is that consideration of the impacts of climate change – the physical risks – has been core business for some of the most exposed sectors for a while now.

Australia’s farmers were among the first to experience the impacts of climate change, and are among the first to begin adapting. Agribusiness has worked hard to use water more efficiently and switch to drought resistant crop variants.

The same is true for infrastructure with long asset lives. Investors and lenders increasingly require owners to have realistic plans to manage physical risks.

The public’s expectations makes this particularly relevant for utilities. A sewerage facility or a water treatment plant that was previously above the high water mark might now be vulnerable to floods or storm surges. Transmission lines, mobile phone towers and roads face heightened bushfire risk over a much longer bushfire season. The consequence of failure for an essential service are high.

But it is not just the most exposed businesses who need to be prepared. It is every business.

The report we released today makes clear the physical risks from climate change are spread across the economy.

Australia’s insurers, of course, have been saying this for a long time. They deserve credit for loudly ringing the alarm bells during a period where the coalition made it politically hard for them to do so.

Insurers will play a key role in helping businesses price and manage risk.

But enterprises themselves will need to start ensuring physical climate risk is properly taken into account, particularly when making the investments that are already required for other business reasons.

When Brisbane Airport extended their runway a few years ago, they took the opportunity to raise it by 1.5 meters to make it more resistant to floods.

It is ok to start with small steps. A study of 28 million insured British properties last year found that a 5% enhancement in flood protection measures reduced losses by 40%.

Companies may need to evolve their management processes to get started. Building the business case for these kinds of decisions can be challenging.

The government has been working on a National Climate Risk Assessment, but that is a high-level national picture.

Businesses might benefit from building their own enterprise picture.

Many of the big resource companies have mapped their exposure to extreme heat as the climate changes. That makes sense - parts of remote Australia and the Pilbara are already pretty unforgiving.

But it’s not only companies with desert facilities that benefit from this thinking!

The decision whether to install cooling equipment at a facility, for instance, might look a bit different if you thought more hot days might force you to stop production for OHS reasons.

These decisions will become easier – we will become more skilled at understanding the value of an intervention and more practiced at implementing them.

Treasury is working on a climate risk disclosure framework that will help mainstream and normalise this practice for larger companies.

And that will allow us to be more creative.

Many Australian businesses have come to see decarbonisation and the energy transition as an opportunity. It is good business to be part of one of the great waves of capital deployment.

Investment in adaptation is the next step.

One of the big questions will be how your businesses can be part of the investments that will be made, both here and overseas.

None of this means giving up on efforts to reduce our carbon emissions. If anything, understanding the costs of responding to the climate effects that are already locked in emphasises the importance of avoiding even more warming.

There will also be some risks that will be more expensive or difficult to manage.

Same may even be impossible to avoid.

But investing in adaptation work now gives us the best chance of limiting the impact of climate change on our economy, our communities, and our natural environment.
 

ENDS