- RBI has issued these guidelines in the exercise of the powers conferred by the Banking Regulation Act, of 1949.
- Climate-related financial risks means the potential risks that may arise from climate change or from efforts to mitigate climate change, their related impacts, and economic and financial consequences.
- Need of Disclosure
- Climate-related risks are one of the emerging risks.
- Helping various stakeholders (like customers and depositors) understand the risks an organization faces.
- Foster an early assessment of risks and opportunities and also facilitate market discipline.
- Applicability: to the following entities, collectively referred to as Regulated Entities(RE’s)
- All Scheduled Commercial Banks (excluding Local Area Banks, Payments Banks, and Regional Rural Banks)
- All Tier-IV Primary (Urban) Co-operative Banks.
- All All-India Financial Institutions
- Large Non-Banking Financial Companies.
- RE’s will be required to make disclosures on four thematic areas (Pillars):
Governance | Governance processes, controls, and procedures used by the RE’s to identify, climate-related financial risks and opportunities. |
Strategy | Strategy for managing climate-related financial risks and opportunities |
Risk Management | Processes to identify, assess, prioritize, and monitor climate-related financial risks and opportunities |
Metrics and Targets | Performance concerning RE’s climate-related financial risks and opportunities |