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A $10 billion industry superannuation fund is working with retail shareholders of a major ASX-listed insurer to force disclosures on climate risk.
Local Government Super has co-filed a shareholder resolution over QBE Insurance Group's failure to disclose the risks, with Market Forces co-ordinating the move.
The resolution requests QBE report as per the recommendations of the global Task Force on Climate-Related Financial Disclosures (TCFD).
Last year, QBE forked out a net of US$1.227 billion as a result of natural disasters - a significant increase on the US$439 million paid out in 2016. According to Munich RE, 2017 saw costs climb to the second highest in insurance history, with an increased volume of natural disasters costing about US$330 billion.
In its most recent sustainability report, QBE's only reference to climate risk was to confirm it is reviewing its readiness to disclose on the matter.
LGS' head of sustainability Bill Hartnett said the industry fund is a long-time supporter of transparency and disclosure by companies and investors.
"Climate change-related risks present very significant investment issues for the insurance industry, and these have been felt by QBE in recent years. LGS is a strong advocate of the international TCFD framework for the disclosure of climate risks, and we encourage QBE, along with other companies, to use the framework to align their disclosures with the needs of investors," he said.
Likewise, Market Forces analyst Daniel Goche said the resolution highlights the shift in investor attitudes toward companies' management of such risks.
"Major Australian shareholders are no longer willing to sit back while companies fail to manage climate change," he said.
"Climate change is increasing the frequency and severity of storms, fires and floods. In 2017, QBE's cost of natural disasters tripled compared to the year prior. This presents a complex risk management challenge for the company, with material ramifications for shareholders."
The TCFD was established by the Financial Stability Board, chaired by Bank of England Governor Mark Carney, in order to address systemic financial risk posed by climate change.
Source: Financial Standard