Australia’s largest insurers are joining forces with leading scientists to develop a common standard to be used in climate change risk projections and disclosure, making comparisons easier.

The Climate Measurement Standards Initiative (CMSI) will create a common understanding of the risks from climate change in Australia and project future repair and replacement costs of residential and commercial buildings and infrastructure. The voluntary standards will give financial disclosure and scientific guidelines and three application reference scenarios.

“Australia has some of the world’s best climate change scientists and this initiative will bring their expertise into the boardroom,” Suncorp CEO Steve Johnston said.

“These standards will assist companies and investors to better understand and evaluate climate-related financial risks and, importantly, helps us to focus on what needs to be done to ensure Australia remains insurable and bankable well into the future.”

The voluntary standards will be comparable between insurers, banks and asset owners and provide companies and regulators with a common understanding of the science and how model-based projections of climate variables can be integrated into risk analysis.

Scientists from the CSIRO Climate Science Centre, Bureau of Meteorology, and leading universities are contributing.

Representatives of insurers, banks, investors, standards bodies and service providers will work with these experts to develop the scientifically robust, common framework for industry disclosure and reporting of climate-related financial risks in Australia.

A draft voluntary standard will be available for initial stakeholder consultation next month.

Scott Hawkins, Head of Non-Life at Munich Re, says a thorough understanding of climate change is essential for the risk management of any business.

“These types of initiatives support transparent comparison between different portfolios when looking at the climate physical risk exposure,” he said.

QBE CEO Pat Regan says the initiative will “facilitate improved stakeholder awareness and understanding of climate-related risks and how individual companies are managing them”.