Governance Briefing — March 7, 2023

Executive briefing: On 7 March 2023 the Office of the Superintendent of Financial Institutions (OSFI) published the final Guideline B-15: Climate Risk Management. The guideline establishes board accountability for climate governance, requires integration of climate scenarios into risk appetite, and introduces new disclosure expectations aligned with TCFD for banks and insurers in Canada.

Key expectations

Board oversight. Boards must assign climate risk responsibilities, oversee strategy integration, and ensure management reports on progress toward climate objectives.
Risk management integration. Institutions must embed climate considerations in risk appetite frameworks, scenario analysis, capital planning, and stress testing.
Public disclosure. Starting fiscal 2024, larger institutions must publish climate-related metrics, targets, and governance disclosures aligned with TCFD recommendations.

Implications for boards

Banks. Boards should ensure enterprise risk management integrates climate risk across credit, market, and operational domains.
Insurers. Boards must oversee climate scenario analysis that informs ORSA and capital adequacy assessments.
Federally regulated credit unions. Governance bodies need to scale climate reporting capabilities and align with OSFI’s proportionality expectations.

Action checklist

Update board charters and risk appetite statements to include climate risk responsibilities and limits.
Develop cross-functional climate data governance programmes supporting scenario analysis and disclosures.
Schedule board education on OSFI’s implementation timelines and reporting requirements.

Sources

Zeph Tech helps Canadian financial institutions operationalise climate governance, scenario analysis, and disclosure programmes that meet Guideline B-15.