Commonwealth Bank and CSIRO team up for climate project

The national science agency CSIRO and Commonwealth Bank have launched a joint project to examine the potential impact of climate change on the finance sector.

CBA chief executive Matt Comyn. Picture: Adam Yip

The national science agency CSIRO and Commonwealth Bank have launched a joint project to examine the potential impact of climate change on the finance sector.

The public-private partnership will develop a plan to help financial services companies manage and reduce the risks of global warming, with insights from the project to be shared on a digital platform.

CBA chief executive Matt Comyn said the purpose was to strengthen efforts made by financial institutions and their customers and communities to adapt to climate change.

“We believe our collaboration with CSIRO will better inform our approach on how to play a leadership role in supporting Australia’s transition to a more sustainable economy,” Mr Comyn said.

“The best scientific insight, combined with our data and insights, means CSIRO and CBA are well placed working together to help businesses understand what risks they face, how they can adapt and what opportunities are available to create jobs and investment in a lower carbon economy.”

CBA chair Catherine Livingstone told the annual meeting earlier this month that the bank began developing “glide paths” in 2021 to track alignment with the Paris Agreement at a sector level.

The initial glide paths were in the four most emissions-sensitive sectors in the lending portfolio – thermal coal mining, upstream oil, upstream gas and power generation.

Ms Livingstone said the glide paths would be implemented in the coming year, helping the banks to understand the impact of lending decisions at a portfolio level.

The bank, however, incurred the wrath of climate activists by setting “glide paths” that were aligned with an International Energy Agency sustainable development scenario to achieve net-zero carbon emissions by 2070 instead of 2050.

CSIRO chief executive Dr Larry Marshall. Picture: AAP

The bank rejected assertions that it had actually gone backwards, saying it would update the scenario when the IEA released the latest data, which came hours after the AGM.

Under the CSIRO partnership, CBA will provide funding for the research as well as anonymised data and information from across a broad range of industries likely to be increasingly affected by climate change, such as manufacturing, infrastructure, and agriculture.

CSIRO will use the data to develop sectoral analysis and different scenarios, enabling the bank to overlay economic and financial insights to highlight the impact on the economy.

Both organisations said the insights will be made available to the broader finance industry, as banks, insurers and other financial institutions developed their own climate change strategies.

CSIRO chief executive Larry Marshall said adapting to a changing climate was a competitive advantage for Australia and would build a stronger economy, more jobs, and more resilient communities.

“CSIRO’s unique climate intelligence, supercharged by Australia’s largest data and AI network, and quantitative analytic capabilities can help financial institutions like Commonwealth Bank navigate an uncertain future,” Dr Marshall said.

“Australian businesses can lead our national response, especially when they have access to Australia’s world-class science and insights to guide meaningful, impactful investment in growth opportunities balanced by risk mitigation.”

CSIRO said its researchers would focus on filling information gaps for the finance sector, such as determining the economic impact of climate change over geographic regions.

The independent, science-based transition scenarios developed in the project would be used to estimate exposure to climate risks in sectors across the economy.

CSIRO scientist David Newth said insights from the research will be valuable across the finance sector.

“Through using models to develop tailored scenarios of how the climate and economy may unfold in Australia and across the world, we can assist businesses like the Commonwealth Bank to understand risks in its portfolio and support its customers and investors to prepare for a changing climate,” Dr Newth said.

“CSIRO will use a coupled economy-wide modelling approach with a focus on agricultural productivity, land-use change and other biophysical considerations to understand socio-economic and physical risks posed by climate change on the Australian economy.”