March 14, 2023
Canada Announces Climate Reporting Requirements for Banks, Insurers, Beginning 2024

New guidelines on climate risk management, depicting requirements for banks and insurance companies to manage and disclose climate-related risks have been released by Canada’s financial regulator, the Office of the Superintendent of Financial Institutions.

Canada’s major banks and insurance companies are expected to adhere to the guidelines for the fiscal year 2024, followed by smaller institutions the following year.

In March 2022, Canada first laid out that OSFI would begin requiring federally regulated financial institutions to publish climate disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework, following directions by Prime Minister Justin Trudeau to cabinet ministers directing them to move towards a system of reporting based on the TCFD.

Disclosure categories including governance, strategy, risk management, and metrics & targets are all covered by the new climate-related reporting requirements for Canadian financial institutions. Key governance and strategy disclosure requirements contain reporting on identified climate-related risks and opportunities, including how management evaluates and the board regulates them, the impact of the risks and opportunities on the institution’s business and strategy, and a breakdown of the institution’s climate transition plan. The climate-related disclosure requirements also include reporting of Scope 1, 2 and 3 greenhouse gas emissions

To manage all aspects associated, which include having correct and appropriate structures in place, the guidance also includes OSFI’s expectations for banks and insurance for the governance of climate-related risks and opportunities. 

The banks and insurers are also instructed to maintain sufficient capital and liquidity buffers for its climate-related risks, incorporating climate factors into capital adequacy and liquidity risk profile assessment processes.

Click here to access the OSFI guidance.

Source: ESG Today