Two major NSW government departments have failed to adequately help manage climate risks to critical public assets and services, the NSW Audit Office says.
The state auditor on Wednesday issued a report showing NSW Treasury and the Department of Planning, Industry and Environment had insufficiently supported agencies to conduct climate risk assessments.
These risks include flooding, bushfires and heatwaves which damage energy, transport and communications infrastructure, social housing and schools.
The NSW Audit Office found DPIE had made climate projections available to its agencies since 2014. but provided limited guidance on identifying climate risks.
NSW Treasury, meanwhile, only clarified the need for agencies to integrate climate factors into their risk management processes in late 2020.
The report also found that DPIE had failed to fulfil a government promise to develop a statewide "climate change adaptation action plan" by 2017.
Climate change impacts must be more effectively communicated to agencies to incorporate into their decision-making and planning, the auditor said.
According to the auditor's office, some $120 billion in physical assets held by nine NSW government entities had not completed climate risk assessments.
The total value of NSW government physical assets in 2020 was $365 billion.
"More work is needed to embed, sustain and lead effective climate risk management across the NSW public sector, especially for the state's critical infrastructure and essential services that may be exposed to climate change impacts," the NSW Audit Office said in its report.
The report recommended DPIE and NSW Treasury work together to co-ordinate climate risk management across agencies, having already released the 'Climate Risk Ready NSW Guide and Course' for agencies this year.
DPIE was specifically encouraged to update information and strengthen education to its agencies and review land-use planning, development and building guidance.
The NSW Audit Office's report comes after a landmark court ruling last month ordered the NSW Environment Protection Authority to develop goals and policies to ensure environment protection from climate change.
NSW Treasury estimates suggest the costs associated with natural disasters exacerbated by climate change will triple by 2060.