On 13 October 2022, the Financial Stability Board (FSB) published its final report on supervisory and regulatory approaches to climate-related risks.

The report is intended to assist all authorities in assessing climate-related risk. However, the applicability of the high-level recommendations may differ depending on each authority’s mandate and the role that different tools (such as scenario analysis) may play in their different sectoral settings.

In particular, the report focuses on three areas:

  • Supervisory and regulatory reporting and collection of climate-related data from financial institutions as foundational elements in the identification and monitoring of climate-related risks.
  • System wide supervisory and regulatory approaches to assessing climate-related risks, including the use of analytical tools such as climate scenario analysis and stress testing.
  • Assessing the extent to which current policies and tools address climate-related risks, and early consideration of other potential macroprudential policies and tools to address systemic risks that may not be addressed fully by current measures, based on the work of standard-setting bodies and authorities.

The FSB will consider in 2024 whether and when to conduct a peer review of supervisory and regulatory practices against its recommendations across jurisdictions, as well as further consideration of the state of development of macroprudential tools. It will also consider, in 2025, whether to make an update to the report’s recommendations.

The FSB has also published a progress report on climate-related disclosures which takes stock of progress made over the past year.

The progress report looks at:

  • Progress made by the International Sustainability Standards Board in developing its global baseline standard.
  • Actions undertaken by jurisdictions to require or promote climate-related disclosures.
  • Firms’ progress in making climate-related disclosures, as reported in the 2022 TCFD Report.