According to Reuters article published on March 7, 2023, a Canadian banking regulator on Tuesday published guidelines to bolster transparency in the country's financial institutions' disclosures related to climate risks starting next year.
Last year, Canada had said banks and insurance companies would need to disclose more about their climate-related risks and exposure beginning 2024 and improve transparency while disclosing such risks.
The Office of the Superintendent of Financial Institutions (OSFI) issued the two-chapter framework, which will apply to domestic banks and internationally active insurance groups headquartered in Canada, effective the end of the 2024 fiscal year.
For other federally regulated financial institutions, the rules will become effective at the end of the fiscal year 2025.
Banks will need to be prepared to maintain operations during climate-related disasters, include the impact of climate change on its liquidity risk profile, tie executive compensation with dealing with such risks, among other requirements.
The regulator, however, did not lay out any specific increases in capital buffers and said the onus was for institutions to self assess within their internal capital.
The framework was first drafted in 2022 and calls for disclosure on governance, strategy and risk management, and metrics relating to financial institutions' greenhouse-gas emissions.
OSFI said it received over 4,300 submissions from a wide range of respondents, including federally regulated financial institutions, for changes to be made in its draft.
It has earmarked some disclosure expectations to be updated after the International Sustainability Standard Board issues its final standards by the end of June.
Canada, the world's fourth-largest oil producer, has committed to achieving net-zero emissions by 2050.
