Investors and regulators will demand more sophisticated climate risk disclosure by banks, forcing lenders to find accurate, quantitative measures relating to emissions as pressure ramps up around ESG-related reporting.

A climate risk self-assessment survey published by the Australian Prudential Regulation Authority last month found nearly a quarter of banks, insurers and super funds had no proper metrics to measure and monitor climate risk. APRA considers climate risk could have a compounding impact on credit, market liquidity and operational risk and is keen to see banks develop better data sets to assess exposures.