This guideline is a product of the 2022 budget commitments of the Office of the Superintendent of Financial Institutions (OSFI). It outlines climate-related risks to federally-regulated financial institutions (FRFIs) and the broader financial system, and OSFI’s expectations regarding the management of these risks. The recognized climate-related risks are:
- Physical risks which pertain to financial risks related to the climate-related extremes and events, gradual shifts, and indirect effects of climate change.
- Transition risks which pertain to financial risks related to the transition to a low-emission economy, including risks from current and future policies, legislations, and regulations.
This guideline requires FRFIs to build financial and operational resilience against these risks through addressing, managing, and monitoring vulnerabilities in their business models and strategies, operations, and accounting procedures. It further seeks that FRFIs create adequate and robust governance and risk management practices through the improvement of their data quality and risk measurement methodologies.
