Australian and global insurers have joined forces with major banks and scientists to establish a set of guidelines to measure the impact of climate change on domestic assets such as properties, buildings and infrastructure.

They say today’s announcement of the guidance set out by the Climate Measurement Standards Initiative (CMSI) will help the industry better understand the financial risk arising from increased severity and frequency of weather events like cyclones and bushfires on underwriting.

The CMSI has been designed specifically to support the G20 Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TFCD) that made recommendations on how to disclose risks associated with global warming to stakeholders.

The launch of the guidelines came ahead of an expected publication from the Australian Prudential Regulation Authority (APRA) on climate change risk guidance it expects financial firms to provide.

APRA has previously said it wants to release the guidelines by the end of the year.

The initiative has been hailed by local industry experts, with QBE Group Chief Risk Officer Peter Grewal saying the group supports “the creation of scientific and technical guidelines to assess climate-related risks to building and infrastructure assets”.

IAG EGM Safer Communities Ramana James says the initiative is an excellent example of how the industry is working together to better understand and measure climate-related risks specific to the Australian environment.

“The launch of this new standard is a positive step that will provide organisations with a framework to report on climate-related risks more consistently,” Mr James said.

Suncorp EGM of Sustainability Risk Andrew White says the guidelines will help companies and investors better understand the financial risks posed by climate change.

“In developing a common approach we can help prepare, co-ordinate and invest in natural hazard resilience building, targeting those Australian communities most at risk,” he said.

Swiss Re, Munich Re, RACQ are the other insurers taking part in the collaboration.

The CMSI guidelines consider future climate change risks that are “chronic” and “acute” for the general insurance, banking and asset owner sectors for the years 2030, 2050 and 2090.

Chronic risks are gradual changes to temperatures, rainfall, sea level, time in drought and days over 35 degrees Celsius. Acute risks include tropical cyclones, east coast lows, extreme rainfall, hail, storm surges and bushfires. The guidelines cover scenarios involving global warming below and above two degrees Celsius.