A Canadian financial regulator released draft guidelines on Thursday to mitigate the impact of climate change and set expectations for financial institutions in the country to have appropriate governance to manage climate-related risks and remain financially and operationally resilient.
The guideline proposes a prudential framework that is climate sensitive and recognizes the impact of climate change on managing risk, the Office of the Superintendent of Financial Institutions (OSFI) said in a statement.
Canada, the world’s fourth-largest oil producer, has committed to achieving net-zero emissions by 2050. The country’s central bank and OSFI said in January that Canada’s plan to transition to low-carbon alternatives poses important risks for some sectors, and delaying actions to prepare could expose financial institutions and investors to “sudden and large losses.”
“Ensuring that the financial system remains resilient in the face of climate change demands that we address its threats with a greater sense of urgency, vigour and effort,” Superintendent Peter Routledge said.
OSFI said it plans to issue the final version of the guideline by early 2023.