This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: Australia's first mandatory climate reporting regime is now upon us. Since January 2025, organizations across the economy have been required to comply with AASB S2.
It requires organizations to assess their climate risks and opportunities and show how they plan to stay resilient under plausible future climate scenarios. Most climate planning begins by asking which future to prepare for, but recent work across two financial sectors suggests a more interesting question is emerging: Which pressures persist regardless of the future that arrives? Over the past year, two of Australia's most community-focused financial sectors, mutual banks and mutual health funds, have moved ahead of the pack.
In partnership with Climate KIC Australia and Finity, members of the Customer Owned Banking Association and the Members Health Fund Alliance have developed sector-wide climate scenarios aligned with AASB S2, along with shared assessments of climate-related risks and opportunities. This is the first time in Australia that two distinct financial sectors have taken a coordinated approach to climate scenario analysis across their sectors. The recently released reports developed by Climate KIC Australia and Finity reveal a picture of climate risk that is broader and more interconnected than a single-entity view can capture.
In banking, climate change affects household income, employment stability, insurance affordability and the financial resilience of communities exposed to extreme weather. These pressures flow directly into credit risk, arrears, hardship support and long-term financial well-being. In health, climate change affects member health outcomes, health care use, provider costs and the affordability of private health insurance.
Heat waves, smoke events, floods and storms are already driving acute and chronic health impacts, mental health pressures and disruptions to care, all of which increase claims costs and strain system capacity. Both reports show climate change is a whole-of-household risk, affecting financial stability and access to essential health services and rippling through homes and communities. Members of these representative bodies chose to develop shared climate scenarios that individual organizations could adapt to their own circumstances, creating a common foundation for disclosure and resilience planning.
The result not only demonstrated the value of collaboration but also brought to light common pressures appearing across multiple climate futures. In banking, borrower affordability and credit risk emerged under both high- and low-warming scenarios, though through different mechanisms. In health, provider costs, premiums and affordability pressures also appeared across both futures, despite being driven by different combinations of physical and transition impacts.
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