Guidelines were released by a Canadian banking regulator on Tuesday to increase the transparency of the country’s financial institutions’ reporting of climate risk beginning next year.
Canada said last year that starting in 2024, banks and insurance companies will have to disclose more information about their exposure to climate-related risks and work to increase openness when doing so.
The two-chapter framework was released by the Office of the Superintendent of Financial Institutions (OSFI), and it will take effect at the end of the 2024 fiscal year for domestic banks and internationally operating insurance organizations with Canadian headquarters.
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The regulations will take effect for other financial institutions at the conclusion of the fiscal year 2025.
In addition to other criteria, banks will need to be ready to continue operating in the event of a climate-related calamity, take into account how climate change may affect their liquidity risk profile, and link CEO compensation to managing such risks.
However, the regulator did not specify any particular increases in capital buffers and stated that it was the responsibility of the institutions to self-assess their internal capital.
Story was adapted from Reuters
