Yesterday, RBI issued a Draft Disclosure framework on Climate related financial risks 2024 applicable for regulated entities (REs). Comments / feedback, if any, may be sent by e-mail with the subject line “Comments on Disclosure framework on Climate-related Financial Risks, 2024”, by April 30, 2024.
The policies proposed will have cascading impact on the loan customers and hence is of interest to the industry also.
The disclosures for REs will cover Governance, Strategy, Risk Management, Metrics and Targets. The Governance, Strategy and Risk management may be rolled out from FY 2025-26 on wards for Banks and top layer of NBFCs. Metrics and Targets may be rolled out in the following year. For ban cooperative Banks the roll out may be deferred by an additional year and for others, the dates need to be announced.
Since the risks of Banks and NBFCs are related to those of their customers, the REs will have to collect information and impose norms for their customers in terms of not only Governance, Strategy and Risk management, but also the Metrics.
The discussion on AI and climate change appears relevant in this context since the customers who are users of AI may be required to disclose information to the investors and who in turn have to submit the consolidated information to RBI.
Naavi
