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Climate risk panel remarks by OSFI Assistant Superintendent, Mr. Ben Gully, at the C.D. Howe Institute

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Jan 28, 2021

On January 28, 2021, OSFI Assistant Superintendent, Mr. Ben Gully, made relevant climate risk remarks as a Canadian financial services regulator during the recent C.D. Howe Institute panel discussion.

Mr. Gully noted that, for OSFI, there is a wide range of possible scenarios to consider when assessing the impact of climate change on financial institutions’ safety and soundness and in setting the appropriate prudential response. When confronted by change on the horizon, OSFI looks to the severe but plausible outcomes, collects information to inform its analysis and risk assessment, and then uses regulation and supervision to preserve financial institution resilience.

He noted that, by definition, the sound management of climate-related risks fits clearly within OSFI’s objectives. As a result, OSFI is taking a number of actions to look more deeply at the prudential impact of climate change in terms of physical, liability and transition risks. In this regard, he noted that transition risks are particularly significant for Canada given its endowment of carbon-intensive commodities and their importance to the Canadian economy.

In recognizing that OSFI does not have all of the answers, he noted that OSFI plans to advance its work through cooperating with domestic and international organizations. By working with others, OSFI will gain a better understanding of what may be appropriate in the Canadian context.

To that end, OSFI has released a Discussion Paper regarding climate-related risks on January 11, 2021. The Paper focuses on risks arising from climate change that can affect the safety and soundness of federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs). Comments are requested by April 12, 2021.

See a com­plete copy of Mr. Gully’s remarks at the C.D. Howe Institute panel discussion which are posted on OSFI's web­site.

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