Climate risk isn't sector-specific. The response shouldn't be either.

Australia’s first mandatory climate reporting regime is now upon us. Since January 2025, organisations across the economy have been required to comply with AASB S2. It requires organisations to assess their climate risks and opportunities and show how they plan to stay resilient under plausible future climate scenarios. 

Most climate planning begins by asking which future to prepare for, but recent work across two very different sectors suggests a more interesting question is emerging: which pressures persist regardless of the future that arrives?

Over the past year, two of Australia’s most community‑focused financial sectors, mutual banks and mutual health funds, have moved ahead of the pack.

In partnership with Climate KIC Australia and Finity, members of the Customer Owned Banking Association and the Members Health Fund Alliance have both developed sector‑wide climate scenarios aligned with AASB S2, along with shared assessments of climate‑related risks and opportunities.

This is the first time in Australia that two distinct financial sectors have taken a coordinated approach across their sectors to climate scenario analysis.

The recently released reports developed by Climate KIC Australia and Finity reveal a picture of climate risk that is broader and more interconnected than a single-entity view can capture.

In banking, climate change affects household income, employment stability, insurance affordability and the financial resilience of communities exposed to extreme weather.

These pressures flow directly into credit risk, arrears, hardship support and long‑term financial wellbeing.

It rarely stays within the boundaries of one institution, instead moving through households, communities, healthcare systems, housing markets and local economies.

Understanding those connections may prove just as important as selecting the climate scenario itself.

There is no obvious reason this model should stop with banking and health. Insurers, superannuation funds, local government, utilities and other sectors depend, in different ways, on the resilience of households, communities and the systems around them.

For an insurer, that vulnerability may be shaped by the interaction between hazards, affordability and the availability of cover, while for a superannuation fund it may appear through long-term asset values, member outcomes and changing regional economies.

Local councils and utilities may see it through infrastructure, service continuity and the capacity of communities to recover from repeated disruption; each sector will need to identify its own transmission pathways.

The mutual banking and health fund projects began with a practical objective: to support disclosure, risk assessment and resilience planning at a sector-wide level. If other sectors apply the same approach, the value may extend beyond more consistent disclosures.

Shared scenarios can help organisations identify common vulnerabilities, understand how risk moves through interconnected systems and focus their attention on the pressures that remain important across different futures.

Over time, that could shift climate reporting beyond understanding risks within individual organisations to a broader understanding of resilience across entire sectors.