He told the UN’s sustainable insurance forum that the idea of taking action to address climate change only as «a luxury or financial burden was redundant».
Speaking as the forum’s chair Mr Summerhayes said there was no doubt that failure to meet the targets set down under the Paris Agreement would have serious consequences for both environmental and financial stability.
«The debate has typically centred around the economic cost of acting, with sceptics alternatively arguing that climate change is a con, or overstated, or that reducing carbon emissions will harm Australia’s economy at the expense of rivals,» he said.
«As regulators and supervisors, our mandates are also strongly focused on financial sustainability: helping the institutions we oversee remain strong, stable and able to continue meeting their promises to their customers.
«With every passing year, as the world moves closer towards the low carbon economy, those two definitions become ever more entwined.»
He told the audience the story of his 81-year-old mother, a climate change sceptic and life-long horse breeder who recently had a racing meet cancelled due to heat for the first time in it history, leaving caterers, owners, trainers, bookies and insurers in the lurch.
«What this small example demonstrates is that climate change is rapidly moving beyond a purely partisan or moral issue – indeed, the threat is distinctly financial in nature,» he said.
US electricity giant PG&E Corp filed for bankruptcy in January in the face of an estimated $30 billion liability caused by California’s 2017 and 2018 wildfires.
«It will not be the last company to fold as the physical, transitional and liability risks of global warming bite ever more sharply in years to come,» said Mr Summerhayes. «Companies and countries that fail to mitigate against climate-related risks and seize emerging opportunities are going to be left behind.»
According to insurance giant Swiss Re, 2018 was the fourth most costly year on record. The primary contributing factor was natural disasters, around 80 per cent of which were climate-related.
Mr Summerhayes said financial regulators should move towards requiring climate-risk disclosures.
«Those companies that are more advanced in their response to emerging climate risks will be better positioned to satisfy regulatory scrutiny,» he said.
Prime Minister Scott Morrison said this month that climate change had contributed to recent devastating extreme weather events in Australia.
The comments sparked the push from moderate Liberal MPs to put climate change back on the party’s re-election radar. The Coalition has struggled to unite around energy policy for more than a decade.
The MPs have argued for policies to help adapt to the changing climate, embrace low-emissions hydrogen technology and further boost the nation’s standing in climate science.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.