Supervisory and Regulatory Approaches to Climate-related Risks

On 13 October the FSB published its final report on Supervisory and Regulatory Approaches to Climate-related Risks. This is “… intended to assist supervisory and regulatory authorities in developing their approaches to monitor, manage and mitigate risks arising from climate change and to promote consistent approaches across sectors and jurisdictions.” given they are all at an early stage.

In preparing this report the FSB make it clear that “The lack of sufficiently consistent, comparable, granular and reliable climate data reported by financial institutions is one main challenge for authorities in the development of supervisory and regulatory approaches to climate-related risks.” As such it is not surprising their recommendations focus improving the quantity and quality of climate-related data, developing appropriate analytical tools, training staff and investing in system capabilities. In doing this the FSB is conscious of the need for proportionality by taking into account the size nature and risk profile of financial institutions.