Energetics consultant Nick Wood has spoken of the need for businesses to consider climate change as part of their future planning, with the bushfires being an example of the type of risk which directors should foresee.
There has been considerable analysis from prominent legal practitioners, including former High Court Justice Kenneth Hayne and Noel Hutley SC that climate change poses a risk to businesses, which should be managed appropriately as part of a director's duties towards the company.
The economic cost of the bushfires is projected at $2 billion, with over $240 million in insurance claims made between October and December, and that number is expected to rise. As such, extreme weather events caused by, or exacerbated by, climate change, can be expected to impact directly on businesses (for example through supply chain disruption), or in generally contributing towards poor market conditions.
For insurers and banks, this highlights the significance of data around modelled physical climate risks, for example to consider whether particular high-risk locations are appropriate for insurance or loans. For businesses in such locations, serious consideration may need to be given as to whether a planned transition to a lower risk location is necessary.
The catastrophic bushfires are a type of physical climate change risk that prudent company directors should have foreseen, according to Energetics associate Dr Nick Wood... He told Footprint there was "ample and clear opinion" from experts of the potential for a catastrophic fire season this summer, including "clear warnings" from bushfire and emergency experts given as long ago as last April... Wood said it was clear that many boards hadn't paid sufficient attention to the types of physical risks they faced as a result of a changing climate..."They did not take on board the extent of this new firestorm danger, they did not integrate it into their thinking, and that is the point of the Noel Hutley opinion," he said.