Canada's Insurance Regulators Update Climate Risk Management Guideline

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Canada's Office of the Superintendent of Financial Institutions (OSFI) has released an updated Guideline B-15: Climate Risk Management, requiring federally regulated financial institutions (FRFIs) to report in line with the International Sustainability Standards Board’s IFRS S2 Climate-related Disclosures standard. The new requirement takes effect for fiscal year-end 2024 for domestic systemically important banks and internationally active insurance groups that are headquartered in Canada. All other covered FRFIs will be required to file disclosures by the fiscal year-end 2025.

OSFI in partnership with the Bank of Canada (BoC) and the Canada Deposit Insurance Corporation (CDIC) also published its final Climate Risk Returns for FRFIs, which will collect climate-related emissions and exposure data directly from Deposit-Taking Institutions (DTIs) and insurers to enable OSFI to carry out evidence-based policy development, regulation, and prudential supervision related to climate risk.

“Over the last year, OSFI has made significant progress in promoting robust climate risk management by financial institutions,” said Peter Routledge, superintendent of Financial Institutions. “Today, we are taking another step by releasing updates to Guideline B-15 and new Climate Risk Returns.”

OSFI has stated its intent to build resilience against climate-related risks by requiring Federally Regulated Financial Institutions (FRFIs) to address vulnerabilities in their business models, operations, and balance sheets - utilizing forward-looking approaches that are holistic, integrated, and built on reliable empirical data and sound analyses.

The release of the final Climate Risk Returns follows a public consultation period during which OSFI held meetings with and received comment letters from in-scope FRFIs, industry associations and other stakeholders. OFSI organized and published the feedback it received.

Source: OSFI,