As regulators around the globe work to develop frameworks for measuring and mitigating climate-related risks, the Financial Stability Board today published recommendations for the reporting and collection of climate-related financial data. The FSB will accept comments on the recommendations until June 30.
“As authorities continue to evaluate their information needs and move towards regular standardized regulatory reporting requirements, key policy considerations include: the expansion of regulatory returns to gather more granular and specific climate-related data on a regular basis; capacity building including upskilling staff and developing analytical tools; information system capabilities; and proportionality, taking into account the nature, size, and risk profile of a financial institution,” the FSB noted.
Specifically, the FSB recommended that regulators work quickly to identify the types of information they will need to assess and monitor for climate risk; establish supervisory expectations addressing financial institutions’ governance, processes and controls with respect to climate-related data reporting; and consider using common definitions—such as those proposed by standard-setting bodies—to define climate risk-related terms.
The FSB also noted that to the extent that regulators require more specific climate-related information to meet their supervisory and regulatory objectives “above and beyond public disclosures,” they should begin by asking financial institutions to report “qualitative information supplemented with increasingly available quantitative information,” and should move to higher reporting standards and requirements as more robust data becomes available. Finally, FSB called for global coordination and cooperation as climate risk reporting frameworks are developed.