Report of the Survey on Climate Risk and Sustainable Finance

The RBI Report of the Survey on Climate Risk and Sustainable Finance

The RBI released a discussion paper exploring strategies to address Climate change related financial risks on July 2022.

Climate-related risks refer to the potential risks that may arise from climate change or from efforts to mitigate climate change, their related impact and the economic and financial consequences.

It can impact the financial sector through two broad channels — physical risks and transition risks

The paper suggested that regulated entities use stress testing and climate scenario analysis to identify and assess vulnerabilities in their businesses. The key learning and suggestions from the survey on climate risk and sustainable finance are categorised under the following topics.

  1. Risk management
  2. Governance
  3. Climate-related financial disclosures
  4. Opportunities from transition to a green future
  5. HR and capacity building
  6. Green initiatives (internal)

Based on the feedback received, the RBI shall issue several guidelines in a phased manner for Regulated Entities. These guidelines shall include

  1. Broad framework for acceptance of Green Deposits
  2. Disclosure framework on Climate related Financial Risks.
  3. Guidance on Climate Scenario Analysis and Stress Testing

RBI has also decided to have a dedicated webpage on its website which will consolidate all instructions, press releases, publications,speeches and related RBI communication on Climate risk and sustainable finance.