QBE is now reporting under Australia’s mandatory climate reporting framework, AASB S2 (ISSB aligned), which requires disclosure of anticipated financial effects of climate-related risks and opportunities. QBE’s first AASB S2 climate statement in its FY2025 Annual Report leaves material investor questions unanswered.

QBE discloses Average Annual Loss metrics under one scenario. While this is a useful risk marker, it has two significant limitations:
(1) It does not translate into what investors actually price, such as implications for company revenue.
(2) It also narrowly focuses on property peril risk when the physical impacts of climate change have macroeconomic implications that are also likely to directly impact QBE’s prospects.

This raises concerns that QBE is significantly underreporting climate risk and undermines the credibility of QBE’s claims that the business is resilient to physical climate risk, even in higher warming scenarios. Prominent experts across the finance sector who acknowledge the systemic macroeconomic effects that climate change will generate, reach fundamentally different conclusions to QBE about the materiality of physical climate risk in higher-warming scenarios.

The resolution seeks non onerous disclosures that bridge the gap between QBE’s current disclosures and the intent of AASB S2 to provide decision useful information to the primary readers of general-purpose financial reports.

Companies reporting under AASB S2 need to make judgment calls about what metrics and qualitative assessments are useful to disclose. Investors can help set consistent standards and ensure meaningful disclosure by providing companies with feedback on the adequacy of current reporting and what disclosures they expect in future reporting.

Revenue impacts
QBE has already exited portfolios in North America and Australia due to climate amplified risk. While this reduced QBE’s property catastrophe exposure, it also reduced the company’s Gross Written Premium by about US$600 million in 2024 and US$250 million in 2025. Around 48% of its current underwriting book is a combination of property and agriculture, and so is likely exposed to physical climate risk. QBE continues to refer to ‘pricing and underwriting appetite’ and ‘portfolio optimisation’ in its suite of tools to manage exposure to physical climate risk.

QBE has undertaken catastrophe modelling that looks forward over 30 years. Management should therefore have an indication of which insurance portfolios are likely to become exposed to a level of catastrophe risk that is above QBE’s tolerance. This information is highly relevant to investors.

Continuing to exit markets as a climate-risk management tool directly impacts future earnings. Investors need to have a sense of the magnitude of the impact as this will help to understand the inherent risks underlying the business. Resolution 2 asks QBE to give an indication of what proportion of its current underwriting portfolio is likely to become unviable due to physical climate risk.

The resolution does not require disclosure of commercially sensitive information. It seeks disclosure at group and existing reportable segment levels. It does not require country, product, counterparty, or pricing disclosures. Consistent with AASB S2, it also allows for ranges and order-of-magnitude indicators if more precise information would not be appropriate.

The resolution does not create an onerous reporting obligation as it asks only for disclosure of risks that management has already identified. There is no additional modelling or risk assessment required.

Macro-economic channels
The physical impacts of climate change will affect GDP growth, inflation, interest rates, risk premia and volatility—all of which feed through to gross written premium, claims inflation, reinsurance pricing and availability, investment income and capital costs. The extent of these impacts over medium to long-term time horizons will depend on which future climate scenarios materialise.

Much of these impacts are currently difficult to quantify and are subject to inherent uncertainties. Resolution 2 therefore seeks only a qualitative description of the pathways through which macroeconomic changes impact QBE’s prospects and a comparison between lower-warming and higher-warming scenarios.

QBE’s current reporting on physical climate risk focuses on Annual Average Loss impacts under one scenario. QBE acknowledges that physical climate risk could impact QBE in other ways such as through reinsurance pricing and availability, but does not provide a comprehensive explanation of these material impact pathways, nor a comparison of different scenarios.

It is useful for investors to have a more comprehensive understanding of the pathways through which physical climate change impacts QBE’s prospects and how different climate scenarios change the severity of the impacts. From a governance and risk management perspective, it is also useful for investors to see that management has comprehensive visibility of the various ways in which the physical effects of climate change impact the business.

The resolution does not require disclosure of commercially sensitive information. The disclosures sought are high level explanations of the ways in which different macroeconomic conditions impact QBE’s prospects.

The resolution also does not create an onerous reporting burden. To understand the impacts that climate change will have on economies and financial systems under different scenarios, QBE can leverage existing resources like the work of the Network of Central Banks and Supervisors for Greening the Financial System and the Institute and Faculty of Actuaries.
We urge shareholders to vote  FOR Resolution 2 to align QBE’s reporting with the intent of AASB S2 and to establish a practical baseline for climate-related financial disclosure in Australia that gives investors the information needed to price risk and capital more accurately.