Summary of remarks by Superintendent Routledge at GLOBExCHANGE

On February 28, 2023, Peter Routledge, Superintendent of Financial Institutions, spoke at GLOBExCHANGE. He provided an overview of OSFI’s role as the prudential regulator and highlighted the impacts that climate related risks can have on the resiliency of Canada’s financial system.

He explained OSFI’s approach to climate-related risk is to help buffer the negative prudential impacts that they could cause on Canada’s financial system. As the impacts and the risks become more profound, ensuring that we identify, prepare, and act early is key.

Superintendent Routledge discussed three areas that are the focus of OSFI’s work in addressing climate related risks:

• Governance – ensuring that board members and leadership teams are prioritizing climate-related risks.
• Disclosure - establishing common definitions, measurements as well as ensuring proper disclosure for federally regulated financial institutions  
• Scenario testing – considering severe but plausible scenarios and evaluating how institutions will respond if an extraordinary event unfolds.

He outlined how OSFI is working with both domestic and international counterparts. These include groups such as the Financial Stability Board, the Glasgow Financial Alliance for Net Zero, the International Sustainability Standards Board, and federal partners on the Financial Institutions Supervisory Committee. These efforts have led to the joint scenario testing work with the Bank of Canada, as well as evaluating the effectiveness of a variety of other approaches being used in other jurisdictions and around the world.

In closing, the Superintendent reiterated that climate change and the global responses to the risks associated with transitioning to a net zero economy are prudential concerns for the Canadian financial system. OSFI’s guidance and approach to supervising climate related risks will continue to evolve to ensure that they remain effective responses to the risks.

As a financial institution supervisor and regulator, we will have a prudent and dynamic climate risk management approach in place to aid Canada’s transition to net-zero 2050. We will direct our approach towards both the opportunities and risks inherent to Canada’s transition.

— Peter Routledge, Superintendent