There goes the neighborhood: Climate change, Australian housing and the financial sector

This discussion paper is the largest review of the financial implications of climate risk to housing in Australia. There goes the neighbourhood focuses specifically on the financial sector, discussing the problem of climate impacts to Australian residential property and the reasons this problem remains unresolved. The publication elaborates further by focusing on the role of the financial system and its institutions in addressing this risk.

The paper goes on suggesting key reforms for various actors involved in the financial sector, which include:

• For insurers to:
  • Review assumtions about climate change
  • Communicate to customers how premiums reflect risks from disasters
• For banks to:
  • Examine climate risk to their own mortgage books
  • Use their role to ensure good policy and reject bad policy
• For financial authorities to:
  • Review risks and factors, to understand nature of climate risk
• For public policy to:
  • Coordinate between levels of government to improve consistency of adaptation