Submissions to a parliamentary inquiry into the prudential regulation of investment in Australia’s resources sector and other export-led industries have turned up the heat on insurers, whose climate policies have come under criticism from the fossil fuels industry.

Adani Group, owner of the Carmichael coal mine, and other fossil fuel companies say the insurance industry’s decision to phase out or reduce its involvement with the non-renewable energy sector has hurt not only their businesses but also risked the country’s economic prosperity.

However, the Insurance Council of Australia (ICA) in its submission says there is growing recognition that climate change and its related risks are having an impact on the resilience of individual financial institutions such as insurers.

Regulators globally have correspondingly stepped up their focus on the management of climate risks, with guidance and actions issued by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.

“Recent priorities for both of these regulators have been the development of guidance frameworks for the assessment and monitoring of climate-related financial risks in the country’s financial system,” ICA said in the submission.

“This regulatory guidance extends to the climate risks of underwriting the fossil fuel sector.”

Pro-climate groups such as Market Forces, a shareholder activist that has targeted the Carmichael mine, including by pressuring insurers against doing business with it, have hit out at the claims by the resources sector and its backers in Canberra.

“Some members of the Federal Government refuse to accept the reality of climate change and the inevitability of the global energy transition,” Market Forces campaigner Pablo Brait told insuranceNEWS.com.au.

“Our elected representatives should be working closely with workers and regional communities to help them seize the opportunities of a zero-carbon future, and rapidly transitioning the economy from coal and gas to clean energy.”

“Insurers, financiers and foreign governments are walking away from coal because it is bad for business and even worse for the climate. It would be an appalling misuse of government powers to force insurers to underwrite dirty coal projects.”

The Whitsunday Conservation Council also took aim at the Government in its submission.

“It is certainly not the Government’s place to attempt to influence or even regulate Australia’s free market economy on behalf of the coal and gas industries,” the council said.

“It is of great concern that members of our Federal parliament are attempting to take action and potentially legislate to limit the free market upon which Australia’s economy is based, and worse, actively encourage unviable, unethical and unsustainable investments.”

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