APRA published an information paper that presents the results of its first climate risk survey on regulated entities. The paper takes stock of actions and initiatives underway in Australia and internationally in response to the growing awareness of physical, transitional, and liability risks of climate change. APRA also announced that it will increase its scrutiny of how banks, insurers, and superannuation trustees are managing the financial risks of climate change to their businesses.
APRA surveyed 38 large banks, insurers, and superannuation trustees, last year, to assess their views and practices on climate-related financial risks. The survey found that a substantial majority of the regulated entities were taking steps to increase their understanding of the climate change risk. Other key findings include the following:
- A third of the respondents believed that climate change is a material financial risk to their businesses and a further half thought it would be in future.
- Majority of the banks considered climate-related financial risks as part of their risk management frameworks.
- Reputational damage, flooding, regulatory changes, and cyclones were nominated as the top climate-related financial risks.
Respondents also described the strategic opportunities they had identified from the transition to a low-carbon economy, including developing innovative products and services, and meeting the growing demand for green investment opportunities.
Keywords: Asia Pacific, Australia, Banking, Insurance, Pension Funds, Climate Risk Survey, Risk Management, Climate-Related Financial Risk, APRA
Previous ArticleESMA Publishes Taxonomy for Implementation of ESEF Regulation
HKMA proposed amendments to the Supervisory Policy Manual, or SPM, module CA-B-2 on systemically important banks.
FSB published the annual report that examines to-date progress toward implementation of climate-related disclosure recommendations of the industry-led Task Force on Climate-related Financial Disclosures (TCFD).
EBA proposed to revise the guidelines on sound remuneration policies in light of the amendments introduced by the fifth Capital Requirements Directive (CRD V).
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
EBA published the first monitoring report that examines the issuance and quality of the minimum requirement for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) instruments in EU.
FSB's Task Force on Climate-Related Financial Disclosures (TCFD) is seeking views on the decision-useful, forward-looking climate metrics for firms in financial sector, with the consultation ending on January 27, 2021.
APRA is consulting on the reporting standard for credit risk management (ARS 220.0).
PRA launched a consultation (CP18/20) setting out proposals for the "Contractual Recognition of Bail-in" and "Stay in Resolution" Rules.
BoE and PRA launched a package of proposals on the resolution policy in UK.
ECB published an opinion (CON/2020/25) on the deposit guarantee scheme and other amendments to the financial services legislation.