While the hot days and warm evenings trigger Australians to think of the beach days and barbecues ahead, many minds are increasingly turning to how this and future summers will be negatively impacted by climate change. And why wouldn’t we, after seeing how the northern hemisphere has suffered through heatwaves across Europe and deadly wildfires in Canada and Hawaii, during what is now officially the hottest northern summer in recorded history.

The signs are closer to home too, with El Nino already declared for Australia and the Bureau of Meteorology predicting an elevated risk of fire danger and extreme heat. We have already seen the impact across the Australian landscape as we reach the end of 2023. So on the back of the COP28 UAE and the realities facing our landscape, some Company Directors may have a restless summer as they grapple to gain awareness and take action.

The reality is that the frequency and intensity of such events is expected to increase as a result of climate change, accelerating the risk to households, business and the environment from extreme weather events and bushfires.

The cost of natural disasters is immense ‑ $38 billion per year to the Australian economy. That is likely to increase to $73 billion by 2060, even in a low-emissions scenario.

The impact to the environment and biodiversity is incalculable. The Black Summer bushfires of 2019-2020 left physical and mental scars. The toll was enormous, with 33 deaths, over 3,000 homes destroyed, more than 3 billion animals killed or displaced and between 12.6 million and 19 million hectares burnt.

While the human and environmental costs relating to climate change hazards remain top of mind, the economic impact for Australians, and globally, cannot be underestimated.

The Australian economy is facing $1.2trillion in cumulative costs from natural disasters over the next 40 years, including significant risks to critical infrastructure and assets. When corporate Australia considers the looming risks to its collective balance sheet, it might better appreciate the impact of climate change.

This could hit the pockets of everyday Australians by way of negatively impacting superannuation funds, hiking insurance premiums or increasing the cost of our weekly grocery shop.

Now as we navigate summer which is expected to exceed the median temperature and contribute to above normal bushfire conditions, we can all take a moment to consider our part in the climate change puzzle and make some actionable decisions.

With ESG risks sitting at the top of Board’s agenda globally and the shift to sustainable orientated global capital markets, the risk is not just environmental and financial, this is a reputational risk that is at the forefront of active shareholders and customers.

The leadership opportunity for the corporate sector is to leverage technology, data and good design and planning to build their capability to respond to climate change hazards.

Given the vast landscape of Australia, we are seeing more companies leveraging data and AI to review their existing bushfire risk and invest in upgrades or maintenance regimes on key assets from power poles to transport routes which underpin a successful export economy and provide the necessary essentials for households across Australia.

This year alone Element Advisory, as part of a our elementcolab.ai innovation team, utilised AI to build a climate-risk assessment solution that automated bushfire risk assessments for more than 2,500ha, enabling a deeper and more efficient approach to providing guidance to companies operating across our vast landscape.

There is also an increasing number of companies from insurers to energy providers focusing on leveraging human movement data and user design to understand and educate customers on how they can practically reduce their risk to climate change, from incentives to change your household garden design to improving energy efficiency or through balancing community values and environmental values in designing community spaces.

We know that the risks are an unfortunate reality, however we see the opportunities ahead for innovation and collaboration from the Boardrooms, investors and customers to tackle climate change risk.

The good news is, we are seeing the demand from Company Directors to tackle this issue and through groups such as the Australian Institute of Company Directors through joining the Climate Governance Initiative to promote the World Economic Forum Climate Governance Principles.

So as Boards and organisations reflect on the year that has passed, 2024 is set for a year of sharp focus, leadership and decision-making on the risks and realities associated with climate change and the impact it poses to their organisations and communities.

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