Canada’s Office of the Superintendent of Financial Institutions (OSFI) has recently updated its Guideline B-15: Climate Risk Management, aiming to better align with global standards on climate-related financial disclosures, specifically the IFRS S2 Climate-related Disclosures.
Alongside this, OSFI introduced new climate risk returns to gather standardized data on emissions and exposures from federally regulated financial institutions (FRFIs). These steps are part of OSFI's efforts to enhance climate risk management among financial institutions.
However, the environmental law charity Ecojustice expressed concerns that these updates may not be sufficient to combat “rampant greenwashing” or ensure that Canada's financial sector aligns with the country’s climate commitments. Karine Peloffy, Ecojustice sustainable finance project lead, highlighted the need for more decisive action from the federal government.
“We need the federal government to show leadership by passing laws — like the Climate-Aligned Finance Act — currently before the Senate, which require big banks, pension schemes and insurance companies to align their business with a livable climate. Canadian regulators need more tools to hold financial institutions to account and align our financial system with our climate commitments,” Peloffy said in a statement.
Peloffy criticized the leeway financial giants still possess in reporting their financed emissions, which allows them to potentially continue supporting fossil fuel projects under the guise of climate action. She urged the federal government, particularly the Prime Minister, to mandate financial institutions to prepare credible, consistent climate plans aligned with Canada’s climate goals, facilitating accountability through public, investor, and regulatory scrutiny.
According to the government, OSFI’s updated guidelines and the introduction of climate risk returns, effective from fiscal year-end 2024 for significant banks and insurance groups and fiscal year-end 2025 for other FRFIs, mark an advancement in the regulation of climate-related financial risks.
Peter Routledge, superintendent of financial institutions, emphasized the progress OSFI has made in promoting robust climate risk management. “Over the last year, OSFI has made significant progress in promoting robust climate risk management by financial institutions. Today, we are taking another step by releasing updates to Guideline B-15 and new Climate Risk Returns,” Routledge said.
However, Ecojustice’s response underscored the broader call for comprehensive federal measures to ensure the financial industry’s full alignment with sustainable environmental practices. OSFI said it continue to review and amend the guideline as practices and standards evolve.