Featured Product

    OSFI to Communicate Next Steps on Climate Risk Policy in Early 2022

    October 12, 2021

    In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks. To promote institutions' preparedness and resilience to climate risks, OSFI is exploring the role of capital requirements, supervisory review process, and market discipline. OSFI received feedback from over 70 respondents, who, in general, supported the OSFI focus on climate-related risks. OSFI received a range of suggestions on climate-related scenario analysis, disclosure, taxonomy, and measurement metrics, among other things.

    Respondents indicated that standardizing taxonomy, measurement methodologies, and metrics across industry can help regulated entities improve their definition, identification, measurement, and management of of climate-related risks. Many respondents believe OSFI has an important role to play in facilitating such standards. The respondents indicated that the availability of decision-useful data, analytical tools, and skills are key challenges for institutions while the use of climate-related scenario analysis and stress testing are still at early stages for many institutions. However, some federally regulated institutions have developed risk management tools and approaches that are aligned with the circumstances of their business activities to manage their new and existing climate-related exposures. Respondents cited stakeholder interest as a key driver of voluntary climate-related financial disclosures. They indicated that stakeholders such as investors, shareholders, rating agencies and regulators drive voluntary disclosures. While there are different forms of climate-related financial disclosures, most who disclose follow the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

    In their responses, many federally regulated institutions indicated that they are in the early stages of assessing and quantifying these risks. There was a general agreement that any new OSFI climate-related guidance should be principles-based and aligned with global standards, where they exist, while considering the Canadian context. OSFI agrees that the guidance on climate-related risks should be principles-based and should consider the Canadian context as well as international developments. Furthermore, any such guidance would be best informed by results from the Bank of Canada-OSFI joint pilot project on climate risk scenarios, for which stakeholders can expect further communication later this year. OSFI expects to communicate next steps on its climate-related policy work early next year. Meanwhile, OSFI will continue to monitor, through its supervision of federally regulated financial institutions, other Environmental, Social, and Governance (ESG) factors for potential linkages to safety and soundness of federally regulated financial institutions.


    Related Links

    Keywords: Americas, Canada, Banking, Climate Change Risk, ESG, Scenario Analysis, Stress Testing, Regulatory Capital, Disclosures, TCFD Recommendations, Green Taxonomy, OSFI

    Featured Experts
    Related Articles

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory 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

    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

    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

    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

    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

    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

    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

    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
    RESULTS 1 - 10 OF 8699