Australia has released its first National Climate Risk Assessment, the most comprehensive analysis of climate impacts the country has ever undertaken.  

The assessment projects more than 1.5 million people at risk from rising seas by 2050, a sharp rise in heat-related deaths, and major threats to ecosystems. These outcomes translate into systemic risks for infrastructure, property markets, insurance and the wider economy.  

This report presents a national view of how climate change will reshape communities, economies and ecosystems, even under best-case scenarios. For businesses, policymakers and investors, the implications are clear.  

Sea level rise and coastal exposure  

By 2030, nearly 600,000 Australians will be living in areas exposed to sea level rise. That number increases to more than 1.5 million by 2050. Under a 1.5°C warming pathway, seas are projected to rise by 0.14 metres. At 3°C, the rise reaches 0.54 metres.  

Queensland is the most exposed, with 18 of the 20 regions facing the highest risk. This has direct implications for coastal infrastructure, housing markets and insurers, as the frequency of flooding and erosion threatens both asset values and the long-term viability of some communities.

For banks, developers and investors, this means greater scrutiny of location-specific risk before financing or underwriting coastal projects.  

Rising health risks from extreme heat  

Extreme heat is set to become Australia’s most severe climate hazard. In Sydney and Melbourne, heat-related deaths are projected to double even if warming is limited to 1.5°C. Under a 3°C scenario, mortality could rise more than fourfold in Sydney and more than double in Melbourne.

These projections highlight the strain on public health systems, workforce safety and productivity. Sectors with outdoor labour such as construction, agriculture and transport are especially exposed, with higher risks of heat-related illness and disruption to operations.

For employers, insurers and investors, this translates into both direct costs and wider economic impacts as extreme heat events become more frequent.  

Financial and economic impacts  

By 2050, disaster recovery costs are expected to exceed 40 billion Australian dollars each year. Property markets are especially exposed, with projected losses in value of more than 600 billion dollars as climate hazards intensify.  

For the financial sector, this raises systemic concerns. Banks face rising credit risk as collateral loses value, insurers must reassess coverage and pricing, and investors may see sudden revaluations of vulnerable assets.

For governments and businesses alike, the growing cost of climate-related disasters represents a material fiscal and operational challenge that will shape capital allocation and long-term planning.  

Ecosystem thresholds and business exposure  

Australia’s ecosystems are approaching critical thresholds. Under a 3°C warming scenario, projected to occur by around 2100 without significant global mitigation, between 40 and 70 percent of species will need to move, adapt or disappear.

Coral reefs face near-certain collapse, and alpine regions, eucalypt forests and Gondwanan rainforests are unlikely to survive into the second half of the century.  

The loss of natural systems reduces the services they provide, from pollination and water regulation to coastal protection. This increases exposure for agriculture, food security, water supply, tourism and insurance markets.

For companies with assets or operations in these sectors, ecosystem decline translates into higher operating risks and rising costs of adaptation.  

Why this matters for business and infrastructure  

Infrastructure under strain  

Ports, airports, energy systems and transport networks are directly exposed to sea level rise, flooding and extreme heat.

The assessment highlights that Northern Australia will face escalating challenges as hazards intensify, affecting critical infrastructure and increasing pressure on emergency response capacity.  

For businesses, this means higher operational risks and more frequent service disruptions. The cost of maintaining, upgrading or relocating essential assets is set to rise, making infrastructure resilience a decisive factor in both investment decisions and long-term competitiveness.  

Insurance and financial stability  

The assessment projects a steep rise in disaster recovery costs and property value losses, which flow directly into the financial system. As more regions face repeated flooding, bushfires or coastal erosion, insurers will need to increase premiums or withdraw coverage.

Banks are also exposed, with higher credit risk as the value of collateral declines and loan defaults rise.  

For the financial sector, these trends signal systemic risk. Limited access to affordable insurance can depress property markets, while concentrated exposure in vulnerable regions can undermine portfolio performance.

Investors, lenders and regulators will need robust climate risk assessments to safeguard financial stability.  

Real estate and property markets  

Housing and commercial property are among the sectors most exposed to climate risk. Coastal developments in particular are identified as high-risk zones, with billions in value projected to be lost as sea levels rise and flooding intensifies.  

For developers, investors and lenders, this makes climate exposure a material factor in asset valuation and financing. Properties in vulnerable locations may face declining demand, rising insurance costs or outright uninsurability.

The result is a growing divide between resilient assets that can attract capital and those that will be increasingly difficult to finance, sell or insure.  

Policy and regulatory direction  

The National Climate Risk Assessment is a foundation for Australia’s new National Adaptation Plan and strengthens the momentum toward mandatory climate disclosure.

Globally, regulators are converging on frameworks such as CSRD in Europe, IFRS S2 internationally, and SB 261 in California. All require organisations to assess and report their physical climate risks with defensible methodologies.  

For companies operating in or connected to Australia, this means disclosure is no longer optional. Forward-looking climate intelligence will be essential not only for compliance, but also for maintaining credibility with regulators, investors and customers.

Businesses that invest early in building this capability will be better positioned as reporting requirements continue to expand.  

From national risk to business decisions  

Australia’s National Climate Risk Assessment provides a clear, evidence-based picture of how hazards such as sea level rise, extreme heat and water stress will affect people, infrastructure and the economy.

For businesses and investors, the value of this report is that it confirms climate risk is quantifiable, location-specific and systemic.  

Historical data is not enough  

The assessment shows that hazards are intensifying and emerging in places without a previous record of exposure. Relying only on past weather data or historical averages does not capture the risks that businesses will face in the coming decades.

Decision-makers need forward-looking models that reflect different warming scenarios and account for compounding and cascading events.  

Risks vary asset by asset  

While national assessments set the context, companies need to understand risk at the level of individual assets and portfolios.

A port in Queensland, a solar farm in South Australia, and a housing development in Victoria will each face different hazard combinations and exposure levels. Without this granularity, it is difficult to prioritise investments, design adaptation strategies or meet disclosure requirements.  

Disclosure is now an expectation  

The Australian government has tied this assessment to its National Adaptation Plan, aligning with international moves toward mandatory disclosure.

Frameworks such as CSRD, IFRS S2 and SB 261 all require companies to report physical climate risks in a consistent, science-based way.

Organisations that can demonstrate defensible assessments will be better positioned to secure investor confidence, regulatory compliance and stakeholder trust.  

Mitiga’s EarthScan and Disclose platforms are built to meet these needs.

They enable teams to:  

• Assess physical climate risk across assets and portfolios under multiple warming scenarios.  
• Run defensible materiality assessments that identify which hazards are most relevant to their business.  
• Produce outputs aligned with disclosure frameworks, supporting compliance and engagement with regulators, investors and insurers.  

Looking ahead  

Australia’s first National Climate Risk Assessment is a milestone. It establishes a national baseline of the risks already emerging and how they may evolve under different warming scenarios.

For government, it informs adaptation planning. For businesses, it reinforces the need to integrate climate risk into strategy, asset management and disclosure.

The findings show that disruption will carry a significant cost, but they also show that risk can be assessed and managed.

Companies that invest in understanding their exposure today will be better positioned to protect asset value, secure finance and meet regulatory expectations tomorrow.

Mitigation also plays a critical role. Reducing emissions today helps limit future warming scenarios and the severity of associated risks, making adaptation more manageable and less costly in the long run.

At Mitiga Solutions, our role is to provide the science and tools to make this possible. With EarthScan and Disclose, organisations can move from high-level reports to detailed, asset-level insights that support both resilience planning and compliance with evolving disclosure standards.

Learn how EarthScan helps organisations assess, disclose and act on physical climate risk today.