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Local weather-related disclosures by regulated entities is a crucial supply of knowledge for various stakeholders — prospects, depositors, buyers and regulators — to know related dangers confronted and strategy adopted to handle such points.
“It’ll foster an early evaluation of climate-related monetary dangers and alternatives and in addition facilitate market self-discipline,” RBI stated in a draft disclosure framework on climate-related monetary dangers, 2024..
“Given the rising significance of climate-related monetary dangers, there’s a want for regulated entities to reveal extra structured details about their climate-related monetary dangers,” the central financial institution stated.
This is part of danger administration insurance policies and processes adopted by regulated entities to successfully counter the affect of climate-related monetary dangers.
The lenders already disclose info on materials dangers. Now, RBI has prompt lenders to reveal the position of administration within the governance processes, controls and procedures and whether or not it’s delegated to a particular management-level place.The disclosure additionally ought to embody local weather resilience of technique adopted together with the enterprise mannequin to climate-related modifications, developments and uncertainties.”The numerous areas of uncertainty thought-about within the evaluation of local weather resilience and the RE’s capability to regulate or adapt its technique and enterprise mannequin to local weather change over the brief, medium and long run,” RBI stated. This shall embody the supply of and adaptability within the present monetary assets to answer the consequences recognized within the local weather situation evaluation for addressing climate-related monetary dangers as additionally to make the most of climate-related alternatives, and the impact of the present and deliberate investments in climate-related mitigation, adaptation and alternatives for local weather resilience.
The lenders shall disclose the data on a standalone foundation and never consolidated foundation whereas overseas banks shall make disclosures particular to their operations in India, RBI stated.
