RBI Proposes Climate Risk Disclosure Framework
The Reserve Bank of India (RBI) has introduced a draft climate risk disclosure framework. Aimed at bolstering the resilience of regulated entities, the framework underscores the growing imperative for robust risk management in the face of climate change challenges – which are expected to have significant impact on reporting entities and pose financial stability risks.
Recognising the evolving landscape, the RBI’s initiative seeks to enhance transparency and accountability among financial institutions. The RBI has identified a need for better, consistent, and comparable climate-risk disclosures – which can be facilitated through use of a standard framework. The goal is for better data on climate related risk to lead to more accurate asset pricing and effective capital allocation.
The framework, structured around governance, strategy, risk management, and metrics/targets, sets out phased implementation and validation processes. Scheduled commercial banks, urban co-operative banks, financial institutions, and select non-banking financial companies will come under the remit of the framework.
By mandating enhanced disclosure requirements, the RBI aims to foster a culture of proactive risk management and sustainable finance practices.
The Securities and Exchange Board of India (SEBI) already require digital Business Responsibility and Sustainability Reporting (BRSR) data, providing a wealth of useful data for analysis. This latest regulation would complement SEBI’s existing extensive ESG data, helping build a complete picture of climate-risk for RBI’s regulated entities.
You can dive into the details here.
