OSFI provides clarification on remarks made by the Superintendent on climate risks

This message is to clarify some information that has appeared in some recent coverage about remarks made by the Superintendent of Financial Institutions on climate risks.

The coverage suggests that the Superintendent was commenting specifically on Canada’s climate change plan. In this instance, the reference to “governments” was used in a generic context. The following is what he said about transition risks associated with climate change:

“Transition risk arises from efforts to reduce greenhouse gas emissions rather than from the changing climate itself. These risks will result principally from the policies that governments have (or will) put in place to reduce emissions. It is also possible that transition risks will arise from changes in investor or consumer sentiment.”

In the speech, the Superintendent noted that OSFI’s role is to prepare for severe yet plausible economic scenarios. The impact of climate change on the economy remains uncertain, but OSFI is planning for the severe yet plausible.

As the Superintendent stated, “As the prudential financial regulator, it’s long been our business to make sure that financial institutions are always prepared to continue functioning through a range of severe yet plausible economic scenarios. So we have already done considerable analysis about how a major economic disruption could impact the financial system.”

A prudential perspective on the risks of a changing climate — Opening remarks by Superintendent Jeremy Rudin