Overview
Introduced: March 2023
Effective from: Fiscal periods ending on or after October 1, 2024
Last modified: N/A
Region(s): Canada
About
Guideline B-15 is a regulatory framework introduced by the Office of the Superintendent of Financial Institutions (OSFI) in Canada. It is designed to enhance the resilience and sustainability of Federally Regulated Financial Institutions (FRFIs) by embedding climate risk management into their strategic and operational frameworks. The guideline focuses on understanding and mitigating the adverse effects of climate change, including both physical and transition risks related to moving towards a low greenhouse gas (GHG) emissions economy.
Criteria for compliance
Entities covered
The guideline applies to all Federally Regulated Financial Institutions (FRFIs) in Canada, including banks, bank holding companies, trust and loan companies, cooperative credit associations, life insurance companies, property and casualty insurance companies, and internationally active insurance groups (IAIGs) headquartered in Canada. However, it excludes foreign bank branches operating in Canada.
Compliance timelines
- October 1, 2024: Implementation of the guideline begins, with specific disclosure expectations to be met for fiscal periods ending on or after this date.
- October 1, 2025: Additional disclosure requirements, particularly around Scope 3 GHG emissions, must be met.
Disclosure requirements
Guideline B-15 outlines extensive disclosure requirements to ensure that FRFIs provide relevant, specific, and comprehensive information regarding their climate-related risks and opportunities:
1. Governance
- FRFIs must disclose the role of the board of directors and senior management in overseeing and managing climate-related risks and opportunities.
- Disclosures should detail how climate-related risks and opportunities are integrated into the institution’s overall risk management and strategic planning processes.
2. Strategy
- FRFIs must describe the climate-related risks and opportunities they have identified over short-, medium-, and long-term horizons.
- They should disclose the impact of these risks and opportunities on their business, strategy, and financial planning.
3. Risk management
- Disclose how climate-related risks are identified, assessed, and managed.
- Explain how these processes are integrated into the overall risk management framework.
4. Metrics and targets
- FRFIs must disclose the metrics used to assess climate-related risks and opportunities, including GHG emissions (Scope 1, Scope 2, and Scope 3).
- Institutions must disclose their climate-related targets and their performance against these targets.
Third-party auditing
While Guideline B-15 does not currently mandate independent external assurance for disclosures, FRFIs are encouraged to adopt robust internal governance processes and controls similar to those used for financial reporting. OSFI anticipates that future updates may introduce expectations for external assurance.
Penalties for non-compliance
OSFI has the authority to enforce compliance with Guideline B-15, which may include penalties or other supervisory actions if a FRFI fails to meet the guideline’s expectations.
