The Office of the Superintendent of Financial Institutions (OSFI) has invited the general public to submit comments on its recommendations on climate-related risks management. CCG hadthe opportunity to submit six recommendations for financial institutions to implement to better integrate risk management:
- Risk Management: Business continuity planning for financial institutions should take into consideration the prioritization of physical risks resulting from a qualitative or quantitative risk analysis.
- Climate scenario analysis: Climate scenario analysis should consider not only the GHG emission reduction targets defined by the IFF, but also the target level of adaptation to climate change within the time horizon analyzed. The implementation of a framework to assess the quality and comprehensiveness of the FRFIs’ adaptation strategies, and the analysis of physical risks and governance, would provide an integrated framework for addressing climate change.
- [Section III. Principle 5] OSFI should clearly define the format and disclosure requirements for standardized exercises for climate scenario analysis prior to issuing the guidelines.
- [Appendix 1.2] Climate change impact analysis should consider both direct and indirect impact analysis, as well as special consideration of “compound risks”, where several risks occur simultaneously or in sequence. Indeed, the consequence of a hazard on a vulnerable environment or infrastructure may itself be a hazard.
- Provide the overall weather-related disaster risk exposure of FFI real estate business (i.e., the overall expected annual losses due to climate change-related disasters) by relevant jurisdiction.
[Appendix 2.1] Regarding GHG emissions metrics, explain ISO 14064-1:2019 as well as other GHG emissions quantification standards. Also, disclose not only the reduction in greenhouse gas (GHG) emissions from the company and its offices but also the expected overall annual losses due to weather-related disasters by relevant jurisdiction, as appropriate.
- Also consider the need to integrate nature into FRFIs’ financial and business decisions through the Taskforce on Nature-related Financial Disclosure (TNFD) guidelines.
CCG commends OSFI’s approach to engaging stakeholders in a public consultation to engage financial sector actors in Canada in managing climate risk and making them more resilient to climate change.
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