ASIC, APRA back super fund code on climate risk

Australia’s financial services regulators have signalled to superannuation funds that they believe industry bodies should be responsible for providing guidance and metrics around climate risk, including development of a code.

The signal has been sent by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) to a roundtable of superannuation fund chief executives including AustralianSuper, UniSuper, Australian Retirement Trust, HESTA and Insignia.

While APRA has provided a prudential practice guide around climate risk, the regulators made clear their preference for the involvement of industry bodies.

In an outline of the roundtable outcome, APRA said that it, ASIC and the chief executives in attendance “all agreed on the crucial role that industry bodies play in supporting trustees and ensuring consistent and effective climate risk disclosure and reporting”.

“The CEOs noted that industry bodies have a role to play in providing clear guidance and standardised metrics to help trustees navigate the complexities of the data,” it said.

“APRA echoed this sentiment, suggesting that industry bodies could develop a code to facilitate collaboration. Similarly, ASIC underscored the importance of industry bodies in aiding compliance and providing practical, user-friendly guidance to ensure reporting is useful for decision making.”

“APRA and ASIC are committed to supporting the superannuation industry in managing climate and nature risks through clear guidance, practical support, and collaboration with industry bodies,” the APRA statement said.

It said the two regulators “emphasise the importance of consistent and accurate disclosures, effective communication with members, and alignment with global standards to ensure the long-term sustainability of member investments”.

The APRA wrap-up said the super fund CEOs agreed on the importance of clear and effective communication with members regarding climate and nature risks.

“They discussed the challenges of making technical information accessible and meaningful to members, emphasising the need for user-friendly guidance, standardised metrics, and concise, consistent communication across different member publications.”

“The CEOs also acknowledged their reliance on third‑party providers of climate data, noting that without consistency in reporting standards and data, providing reliable information for effective member communication is challenging.”