Featured Product

    NGFS Publishes Recommendations to Better Manage Environmental Risks

    May 27, 2020

    CMF announced the publication of two documents prepared by the Network for Greening the Financial System (NGFS) on better management of climate-related and environmental risks. One of the documents is a guide for supervisors that sets out five recommendations on action to be taken by the NGFS members as well as the broader community of banking and insurance supervisors to integrate climate-related and environmental risks into their work. The second document is status report on the experiences of financial institutions on working with green, non-green, and brown financial assets and a potential risk differential; this document also offers an overview of industry definitions and practices on quantification and mitigation of environmental risks.

    Guide for Supervisors. The content of the guide is based on input received from NGFS members and work done by supervisors outside the network. The outcomes clearly show that worldwide supervisors are taking action. The practices showcased in the guide aim to further inspire supervisors and help them accelerate their efforts. The guide sets out the following recommendations for supervisors:

    • Determine how climate-related and environmental risks transmit to the economies and financial sectors in their jurisdictions and identify how these risks are likely to be material for the supervised entities
    • Develop a clear strategy, establish an internal organisation, and allocate adequate resources to address climate-related and environmental risks
    • Identify the exposures of supervised entities that are vulnerable to climate-related and environmental risks and assess the potential losses should these risks materialize
    • Set supervisory expectations to create transparency for financial institutions in relation to the supervisors’ understanding of a prudent approach to climate-related and environmental risks
    • Ensure adequate management of climate-related and environmental risks by financial institutions and take mitigating action where appropriate

    NGFS Status Report. This report highlights the main findings of a survey conducted by the NGFS among 49 banks and five insurance companies around the globe. The survey was intended to understand how financial institutions kept track of the specific risk profiles of green, non-green, and brown financial assets; developed specific risk metrics; and analyzed potential risk differentials. Although not conclusive on the existence of a risk differential, the report shows positive trends among financial institutions to better account for climate related risks of their assets and suggests encouraging ways forward in the analysis via forward-looking methodologies. The report recalls the impossibility for a complete assessment without harmonized green and brown taxonomies.

    Looking ahead, two other documents dedicated to climate scenario-analysis will be published by the NGFS shortly. NGFS will also start working on the data and metrics needs for the assessment of climate and environmental risks and investigate the possible access limitations. Additionally, NGFS announced that twelve new members have joined the Network since the beginning of 2020. These are Central Bank of Brasil, Central Bank of Armenia, Central Bank of Cyprus, Central Bank of Georgia, Central Bank of West African States, Danish Financial Supervisory Authority, Bank of Estonia (Eesti Pank), Financial Market Authority Austria, Bank of Latvia (Latvijas Banka), Bank of Lithuania (Lietuvos Bancas), Malta Financial Services Authority, and National Bank of Cambodia. CMF is involved in the micro-prudential oversight work of the NGFS and has formed a Climate Change Working Group that is developing supporting documents for the Board of the Commission. The issues being addressed include climate risk monitoring, climate risk information dissemination, and the development of a green financial market. CMF also participates as a technical advisory body to the Green Finance Bureau of the Ministry of Finance.

     

    Related Link (in Spanish): Press Release

     

    Keywords: International, Banking, Insurance, Securities, Climate Change Risk, ESG, Sustainable Finance, Green Assets, NGFS, CMF

    Related Articles
    News

    PRA Proposes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    PRA proposed rules (in CP12/21) for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA).

    June 21, 2021 WebPage Regulatory News
    News

    ECB Extends Leverage Ratio Relief for Banks Until March 2022

    ECB Banking Supervision announced that euro area banks it directly supervises may continue to exclude certain central bank exposures from the leverage ratio until March 2022.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Treatment of Credit Valuation Adjustments

    OSFI decided to increase the Domestic Stability Buffer from 1.00% to 2.50% of total risk-weighted assets, with effect from October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    HKMA Requires Banks to Submit Plans for Fintech Adoption

    HKMA is requesting banks to participate in a tech baseline assessment, which forms part of the HKMA Fintech 2025 strategy.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Operational Risk Capital Data Management Expectations

    OSFI published two documents to consult on the management of operational risk capital data for institutions required, or for those applying, to use the Basel III standardized approach for operational risk capital in Canada.

    June 18, 2021 WebPage Regulatory News
    News

    NGFS on Addressing Financial Stability Issues from Biodiversity Loss

    The NGFS Study Group on Biodiversity and Financial Stability published a Vision paper exploring the case for action in addressing the financial stability concerns arising from biodiversity loss.

    June 18, 2021 WebPage Regulatory News
    News

    ACPR Publishes CREDITIMMO Version 2.3.0 Taxonomy for Banks

    ACPR published the final version of CREDITIMMO 2.3.0 taxonomy for the decree of October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    EC Prolongs Italian Guarantee Scheme for Non-Performing Loans

    EC, has approved, under the EU State Aid rules, the fourth prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans.

    June 18, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7128