SYDNEY (Reuters) – Australia’s banking regulator on Friday released its final guidance for banks, insurers and pension funds to manage financial risks associated with climate change, stopping short of imposing new requirements.
The Australian Prudential (NYSE:) Regulation Authority (APRA) said the principle-based guide is aligned with the Financial Stability Board’s Disclosures Task Force on Climate-related Financial (TCFD) recommendations but does not impose new regulatory requirements.
“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 said.
The guidance paper “is a direct response to their request for more clarity about regulatory expectations and examples of better industry practice.”
The regulator will conduct a survey on climate change financial risk to understand the level of alignment between institutions’ management of climate change financial risks, the new guidance and the TCFD recommendations.