-
ALSO READ
COP26: Little time, but 'mountain to climb' at UN climate talks
UN chief urges 'rapid' emission cuts to curb climate change
Monetary policy highlights: Growth not at pre-pandemic level yet, says RBI
Delhi to start implementing action plan to combat climate change by yr end
AUS vs WI full schedule, live toss timings and streaming details in India
-
Australia's banking regulator released on Friday its final guidance for banks, insurers and pension funds to manage financial risks associated with climate change, stopping short of imposing new rules.
The Australian Prudential Regulation Authority (APRA) said the principle-based guide is aligned with recommendations from the Financial Stability Board's Disclosures Task Force on Climate-related Financial (TCFD) set up by the G20 rich countries to coordinate rules.
"Most APRA-regulated entities recognise the potential challenges of climate change, such as ... new laws or adjustments in asset values, but they don't always have a good understanding of how to respond," APRA Chair Wayne Byres said.
The guidance paper followed a draft version published in April for consultation and "is a direct response to their request for more clarity about regulatory expectations and examples of better industry practice," Byres said.
The guidance calls for financial companies to immediately start managing climate change risks within their existing risk management frameworks.
It calls for directors to set "exposure limits and thresholds for the financial risks that the institution is willing to bear" when climate risks are considered material.
Management must also set clear lines of responsibilities in the managing climate-related risks, and company boards must hold senior management to account for such responsibilities.
But it does not asks for an explicit alignment between climate risk management and executive remuneration.
"Some international regulators are increasingly making a direct connection between climate risk and remuneration. APRA ... retains the view that boards should maintain the discretion to design a remuneration framework that is appropriate for their institution."
The regulator will conduct a survey on climate change financial risk to understand the level of alignment between institutions' management of climate change financial risks, the new guidance and the TCFD recommendations.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU