The Office of the Superintendent of Financial Institutions (OSFI) in Canada has updated its Guideline B-15 on Climate Risk Management. These updates aim to align the disclosure requirements in the guideline with those from the Canadian Sustainability Standards Board (CSSB), which released its voluntary sustainability standards in December 2024. The CSSB standards represent Canada's inaugural set of generally applicable sustainability disclosure standards and are closely modeled after those developed by the International Sustainability Standards Board (ISSB).
Guideline B-15 applies to all federally regulated financial institutions (FRFIs), including Domestic Systemically Important Banks (D-SIBs) and Internationally Active Insurance Groups (IAIGs) headquartered in Canada. Key updates to the guideline include :
Extension of the deadline for disclosing Scope 3 greenhouse gas emissions to fiscal year 2028, in alignment with the CSSB standards.
Clarified expectations for disclosing climate-related financial information for both on-balance sheet and off-balance sheet assets under management.
Setting fiscal year 2029 as the implementation date for disclosing Scope 3 greenhouse gas emissions related to off-balance sheet assets under management.
Furthermore, OSFI plans to hold a consultation later this year on the disclosure expectations of greenhouse gas emissions from off-balance sheet assets under management.
From a governance perspective, banks must ensure they have appropriate structures and clearly defined roles and responsibilities for overseeing climate-related risks. Strategically, they also need to incorporate climate-related risks into their business models and strategic planning processes. Operationally, banks are still expected to utilize climate scenario analysis to assess the potential impacts of climate-related risks on their risk profiles and business models. This includes both their own internal analyses and participation in standardized exercises led by OSFI.
The postponement of the Scope 3 GHG emissions disclosure deadline to fiscal year 2028 provides banks with additional time to refine their methodologies and data collection processes for these complex emissions. However, banks will need to continue investing in improving their data collection, analysis, and modeling capabilities to effectively manage and report on climate risks across all scopes. The updated OSFI B-15 guidelines reinforce the importance of climate risk management for Canadian banks. While the extension for Scope 3 emissions provides some flexibility, the overall expectations for understanding, managing, and disclosing climate-related risks remain significant.
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