Australia’s banking regulator finalises climate change policy guidance By Reuters

(Refiles to repair typo in eighth par)

By Paulina Duran

SYDNEY (Reuters) -Australia’s banking regulator launched on Friday its last guidance for banks, insurers and pension funds to handle monetary dangers related to climate change, stopping wanting imposing new guidelines.

The Australian Prudential (NYSE:) Regulation Authority (APRA) mentioned the principle-based information is aligned with suggestions from the Financial Stability Board’s Disclosures Task Force on Climate-related Financial (TCFD) arrange by the G20 wealthy nations to coordinate guidelines.

“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 mentioned.

The guidance paper adopted a draft model printed in April for session and “is a direct response to their request for more clarity about regulatory expectations and examples of better industry practice,” Byres mentioned.

The guidance requires monetary corporations to instantly begin managing climate change dangers inside their current danger administration frameworks.

It requires administrators to set “exposure limits and thresholds for the financial risks that the institution is willing to bear” when climate dangers are thought of materials.

Management should additionally set clear strains of obligations within the managing climate-related dangers, and firm boards should maintain senior administration to account for such obligations.

But it doesn’t ask for an express alignment between climate danger administration and govt 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 monetary danger to know the extent of alignment between establishments’ administration of climate change monetary dangers, the brand new guidance and the TCFD suggestions.

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