The Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) issued a joint statement on the actions being taken to ensure that the financial system is prepared to respond to the climate change risks. In the statement, the authorities focus on integrating climate-related risks into financial stability monitoring and micro-supervision, analyzing the effect of climate risks on the macroeconomy and financial stability, building awareness and intellectual capacity and encouraging knowledge sharing, and integrating sustainability factors into own operations.
APRA is leading a bottom-up supervisory climate vulnerability assessment exercise with the five largest Australian banks under its supervision, using as its basis the Network for Greening the Financial System (NGFS) scenarios that are being adapted to explore the Australian conditions. RBA is assisting APRA with the exercise, which commenced in 2021 and whose results are expected to be published in 2022. The climate vulnerability assessment aims to assess potential financial exposure to climate risk, understand how banks may adjust business models and implement management actions in response to different scenarios, and foster improvement in climate risk management capabilities. Additionally, in 2021, APRA plans to finalize prudential guidance to assist supervised entities to identify, monitor, and manage the climate risks. The prudential practice guide has been informed by stakeholder consultation and provides guidance on prudent practices in the management of financial risks arising from climate change, including with respect to governance, risk management, scenario analysis, and disclosure.
APRA is also considering a periodic climate risk self-assessment survey to assist in understanding the financial sector’s alignment to the guidance. RBA will conduct analysis to monitor the implications of climate change and related mitigation policies for the economy and the transmission of monetary policy through financial markets and the banking system to households and businesses. RBA plans to continue to augment its forecasting models and its broader suite of macroeconomic models to understand the macroeconomic implications of different climate risks, including how climate risks translate into financial stability risks. APRA and RBA work with other regulatory agencies through the CFR Climate Change Working Group. Internationally, RBA and APRA will continue to share knowledge through forums including the NGFS, the Financial Stability Board (FSB), the Bank for International Settlements (BIS), and the Executives’ Meeting of East Asia Pacific Central Banks (EMEAP).
Keywords: Asia Pacific, Australia, Banking, Climate Change Risk, Disclosures, Prudential Guidance, Stress Testing, Scenario Analysis, ESG, Financial Stability, NGFS, RBA, APRA
Previous ArticleUK Authorities Publish Fourth Edition of Regulatory Initiatives Grid
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.