Regulation: Australian Banks Expect to Reduce Exposure to Industries Affected by Climate-Risk

December 13, 2022

According to the results of a climate vulnerability assessment (CVA) conducted by the Australian Prudential Regulation Authority (APRA), Australia’s largest banks have outlined how they would amend both their risk appetites and lending practices in response to increasing climate-related losses. Proposed responses include reducing high loan-to-value mortgage lending and minimizing exposure to sectors such as mining, manufacturing and transport. The APRA carried out its CVA with the country’s five largest banks, which prepared estimates and carried out modeling to assess the potential financial impact of climate change on their business. The banks were further required to provide potential responses to both physical and transition-related climate risk.

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