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CVA and Greewashing

Friday 2 December 2022



Climate change-related risks to the Australian economy


Prudential-regulated businesses might not have a better idea about how they can build their resilience against climate change-related future risks, but the recent assessment carried out on behalf of the Council of the Financial Regulators (CFR) might be a start in building better tools and understanding.

The Australian Prudential Regulation Authority (APRA) Deputy Chair Helen Rowell, “The results suggest that banks’ losses from their lending portfolios could rise in the medium-to-long-term as climate change and the global response to it unfolds.Although those impacts are not expected to cause severe stress to the banking system, climate change could lead to the banking sector being more vulnerable to future economic downturns.”

 The evaluation looked at climate risk impacts if emissions continue to increase to 2050 or if they are drastically or if emissions would be drastically reduced by 2030.

Rowell said that while the climate change-related risks have a ‘high profile’ there is still uncertainty about how these risks will play out in the future.
Click here to read the 
Climate Vulnerability Assessment.
 

Greenwashing Allegations 

Meanwhile, the Australian Securities and Investments Commission (ASIC) issued three infringement notices to Vanguard Investment Australia for allegations of ‘greenwashing’.

The securities and investments regulator was concerned that Vanguard’s product disclosure statement (PDS) excluded tobacco-related investments.
The investment company paid almost $40,000 for compliance with the infringement notice.

ASIC Deputy Chair Sarah Court said in an official statement at the announcement of the ‘greenwashing’ allegations, “Investors can feel strongly about not investing in tobacco production, manufacturing and sales, and where tobacco-exclusion investments are promoted, the entity making those claims must be able to substantiate the full exclusion of those investments.”