Featured Product

    BNM Committee Recommends Ways to Bridge Gaps in Climate Risk Data

    December 16, 2022

    The Bank Negara Malaysia (BNM) announced that the Joint Committee on Climate Change (JC3) issued the Climate Data Catalog and a report that outlines the key findings and recommendations with respect to bridging the gaps in climate risk data.

    The data catalog contains critical data needed by the financial sector to support pre-identified use cases and includes data that are available, partially available, and unavailable, as well as observations on data gaps. The Data Catalog is compiled by the Sub-Committee on Bridging Data Gaps, of the Joint Committee on Climate Change (JC3). The data catalog is aimed at serving as a source of reference on climate and environmental data for the financial sector and represents a call to action for stakeholders to collectively improve the availability and accessibility of climate data. Moving forward, the Sub-Committee on Bridging Data Gaps will pursue efforts to collaborate with relevant stakeholders to bridge data gaps. An immediate area of focus for 2023 is to work with data providers to improve the availability of a number of the top priority data items. 

    The report on climate data takes stock of the climate and environmental data needs of the financial sector in Malaysia and reveals that that 49% of data items are available. Of these 49% of data items, only 18% are readily available. The remaining available data items suffer from gaps such as lack of granularity or accessibility. The accessibility of data either entails manual effort for data extraction or the data is proprietary, thus requiring subscription. The remaining data items are not published due to the confidentiality restrictions (11%) or are not available (40%). The report reveals that the identification of sources for critical climate data through the Data Catalog exercise has led to the discovery of several critical data gaps. Factors contributing to these gaps in public-sector data include methodological differences, legal impediments, and decentralized data compilation and publication. For the private sector, the main challenges are lack of capacity and motivation to collect and disclose climate data, particularly among the SMEs. The report notes that addressing these challenges will be important to collectively bridge identified data gaps. The report sets out the following key recommendations to bridge the data gaps:

    • One recommendation is to implement common definitions and methodologies for key climate data to improve quality, reliability, and comparability of data. Common methodology to calculate emissions at the corporate level could be considered for adoption to improve the availability of entity-level greenhouse gas emissions data.
    • Another recommendation involves alignment of disclosure requirements to established standards and frameworks. Disclosures can also be expedited to bridge data gaps through shifts to open data and the review of current data confidentiality restrictions.
    • The public sector should consider using common interoperable data standards, application programming interfaces (APIs), and open data platforms. This will enable climate data to be organized in a manner that is easily accessible by users. Ideally a central body should be formed to lead the initiative, and subsequently enforce the implementation of open data across government agencies.
    • Regulators may support and catalyze the establishment of an industry-led platform to accelerate climate data disclosure by companies. The coverage should extend beyond publicly listed companies, to also cover smaller firms such as the SMEs. The platform should ideally address the current fragmentation and uneven progress in disclosures. One means is by setting a low barrier to disclosure among the companies, thus improving the coverage of climate data disclosure for the use of financial sector.
    • Yet another recommendation is for the financial sector to bridge the knowledge gaps through partnerships with academia and field experts.
    • The financial sector can also explore incorporating existing data in their environment, social, and governance (ESG) rating methodology to rate and assess borrowers during onboarding and annual reviews of exposures as part of their climate risk management and assessment.
    • Technology, existing data sources, and methodologies can be better leveraged to enhance the availability and quality of climate data. This could be achieved by utilizing global and open-source platforms, along with making better use of new technologies and APIs. Stakeholders in the climate data ecosystem may also consider using cutting-edge technologies, including machine learning and artificial intelligence, satellite imagery as well as statistical gap-filling approaches to bridge climate data gaps.

    The findings from this exercise underscore the importance of ongoing collaborations between the public and private sector actors in the climate data ecosystem to prioritize, plan for, and ultimately close key data gaps, as part of a whole-of-nation strategy to support Malaysia’s orderly
    transition to a low-carbon economy.

     

    Related Links

     

    Keywords: Asia Pacific, Malaysia, Banking, Reporting, Basel, Climate Change Risk, ESG, Climate Data Catalog, Disclosures, Open Data Platform, Regtech, BNM

    Featured Experts
    Related Articles
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697