BCB proposed rules for the management of social, environmental, and climate risks by financial institutions, with the comment period ending on June 05, 2021. The proposal covers the inclusion of perspective related to climate change in the Brazilian regulatory framework, both under the risk management aspect as well as the liability policy. The proposed rules are expected to enter into force on January 01, 2022.
In addition to improving the definitions of social, environmental, physical, and climate-related transition risks, the proposal moves toward strengthening the integration of these risks to the management of other traditional risks (such as credit, market, liquidity and operational risks). The proposal covers minimum criteria for the identification, measurement, evaluation, monitoring, reporting, control, and mitigation of the adverse effects of the interactions between these risks. The proposal also focuses on requiring the inclusion of social, environmental, and climate risks in the Risk Appetite Statement (RAS), in the management of business continuity, in the risk governance structure. and in the stress testing framework. The proposal covers the explicit need for more complex institutions to carry out scenario analysis, considering the hypotheses of climate change and transition to a low-carbon economy. Among the requirements of the proposal is the need to implement actions with a view to ensure the effectiveness of Social, Environmental, and Climate Responsibility Policy (PRSAC) and the maintenance of an adequate governance structure. Disclosure of PRSAC to the external public is also required with respect to the actions implemented and the criteria for evaluating the effectiveness of these actions.
Related Links (in Portuguese)
Comment Due Date: June 05, 2021
Keywords: Americas, Brazil, Banking, ESG, Climate Change Risk, Basel, Credit Risk, Liquidity Risk, Operational Risk, Stress Testing, Disclosures, BCB
Previous ArticleUS Agencies on Model Risk Management for BSA/AML Compliance by Banks
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.
OSFI has set out the schedule for release of draft guidance on the management of technology risks by federally regulated financial institutions and private pension plans.
MAS updated rules for new housing loans by banks and finance companies.