(Bloomberg) Canada’s federal banking regulator suggested that the country’s financial institutions may face additional requirements to ensure they’re resilient in the face of climate change and the transition from fossil fuels to renewable-energy sources.Part of the mandate of the Office of the Superintendent of Financial Institutions is to ensure the country’s financial system remains strong, “regardless of the pathway the world follows in its pursuit of net-zero 2050,” Superintendent Peter Routledge said Monday in prepared remarks to the RBC Capital Markets Canadian Bank CEO conference. Physical risks from climate change also will be a focus, he said.
“We will have to ask hard questions of the entities we supervise to ensure they have sufficient capacity in the form of buffers — capital and otherwise — and risk-management disciplines to absorb intensifying physical climate risk,” Routledge said.
The insurance industry has the greatest exposure to physical climate risk in the near term and already is making “good progress” on those issues, Routledge said.
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