Is the watchdog OK with that? Mr Kelly asked of officials from the Australian Prudential Regulation Authority, with the clear implication that it should be.

"Say if a company wants to invest heavily in tourism in the Maldives and wants to build lots of new resorts ... on low-level islands. Some may say in the climate orthodoxy that these islands are all going to go underwater. But this company thinks, on climate I've looked at what Professor Alex Morner has said, I don't think the sea level's going to affect these resorts," Mr Kelly put to the officials, referencing a retired Swedish academic, Nils-Axel Morner, who rejects the mainstream data on sea level change.

"In excess of 95 per cent of scientists globally have coalesced around the factors that are leading to sea level rise," chairman of the authority's risk committee Geoff Summerhayes rebuffed Mr Kelly. "We would expect that if you are providing credit to your hypothetical investment you have considered that risk" and priced it in.

Yes, but what if a company wanted to go with the 5 per cent of scientists and invest precisely because no-one else was doing so, Mr Kelly persisted, before shifting back to coal. What if a superannuation fund wanted to invest in thermal coal, believing there was a strong market for exports to India and China, despite the "more standard run of the mill" view on the future of coal.

Mr Kelly and fellow Liberal Tim Wilson were pursuing the authority because it expects superannuation funds and others to take climate change into account in investment decisions.

Mr Wilson highlighted Uni Super's announcement that it would be making full climate assessments for its investments.

"How on earth is APRA assessing climate risk?" Mr Wilson asked. "APRA really doesn't have that internal capacity does it?"

Liberal senators have pursued banks and superannuation funds in recent weeks over their decisions to reduce or eliminate investments in coal, which they have insisted is a simple business decision and risk assessment.

The prudential regulation authority told senators it expects superannuation funds and others to take climate change seriously and factor it into business plans and risk assessments. Central banks and regulators around the world were using a zero carbon by 2050 scenario to model the impact on the economy and on the value of companies' assets and investments.

Mr Summerhayes said the authority wanted "thorough diligent risk assessments" from superannuation funds.

"We are not a scientific body. We don't profess to be. We are interested in financial risk to those institutions and the implications to their members ...

"There could be some firms that have not got the risk on their radar, full stop. And we would be concerned about that because that would say that that firm is clearly deficient as it relates to this growing and material risk to all sectors of the economy."

Authority deputy chairwoman Helen Rowell said low-lying Maldivan resorts would be OK if they were part of a properly constructed investment strategy that was not overly concentrated in one area.

Chairman Wayne Byres also tried to reassure Mr Kelly.

"All we're asking them to do is make sure they've got a well-diversified portfolio, they've thought about the risks, and they've thought about how the assets are consistent with delivering good retirement outcomes for the members," he said.

"... We have no prohibition and there is no instruction to get out of particular sorts of assets."

The authority has its eye on about 20 underperforming superannuation funds - of the 96 funds in total. MS Powell said the 20 were "really quite poor across a number of dimensions", apparently as a result of poor strategic decisionmaking, poor implementation of investment strategies, or insufficient scale. The problem should be dealt with quickly, she said.

About 20 more funds "have some issues".