The Reserve Bank of India (RBI) released a discussion paper on climate risk and sustainable finance to help regulated entities deal with the issues arising of a warming planet. The guidelines revolve around appropriate governance, strategy to address climate change risks and risk-management structure to manage them from a micro-prudential perspective. Regulated entities may explore aligning their climate-related financial disclosures on the lines of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures’ framework. In view of the evolving developments in climate-related disclosures, a “comply-or-explain” approach may be adopted by regulated entities, considering the significance of their operations, including the nature and size of their businesses, and, the materiality of climate-related risks they are exposed to.
The discussion paper proposed that regulated entities should also start chalking out a plan to obtain relevant information such as collecting emission data from their customers. The Indian Banks’ Association (IBA) may set up a working group on capacity building in the area of climate risk and sustainable finance to assess the training requirements for bankers and ways to meet them through the available training establishments, certification programmes and online courses, among others. The discussion paper stated that it is a "good practice" for regulated entities to have a committee or a sub-committee at the board level comprising experts from sustainability and risk domain.
The RBI has invited comments on this discussion paper from regulated entities and other stakeholders by September 30.
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