Climate change poses a significant risk to financial institutions’ business model, strategy and overall performance. It also presents substantial opportunities for financial institutions given the key role they play in facilitating the smooth transition to a greener and more sustainable economy.
Mazars Canada’s inaugural benchmark study on climate-related financial disclosures show cases practices that Canadian financial institutions have put in place to manage climate- related risks and opportunities. Our study seeks to assess the level of maturity of FRFIs to provide comprehensive climate-related disclosures in line with regulatory expectations and industry best practices. It uses publicly available climate reports published by the largest FRFIs for the fiscal year ended 2022. It gathers key insights into the status of climate-related practices around governance, strategy, risk management and metrics.
- 67% of FRFIs disclosed how climate matters had been updated into the responsibilities for all Board governance committees while 33% disclosed the updates for some of their Board governance committees.
- Though 78% indicated climate-related matters had been incorporated into the remuneration criteria, only 22% provided information on the metrics and methodology they use.
- FRFIs disclosed provided very limited information on how they believe their strategies may be affected or changed due to climate-related risks and opportunities.
- 44% of FRFIs disclosed how they have expanded the definition of existing material risk categories to incorporate the impact of climate risks. However, there was limited information shared on how climate-related risks had been integrated into their risk taxonomy and the hierarchical levels of each existing risk type.
- 56% of FRFIs provided a conclusion on the materiality of impact of climate-related risks following the climate scenario analysis performed. However, only 33% provided justification for these conclusions. None of FRFIs expressed results in quantitative terms.
- All the FRFIs disclosed their Scope 1 and 2 emissions in absolute terms i.e., in tonnes of CO2e.
- 22% of FRFIs disclosed current year Scope 3 finance emissions across one or all their identified material sectors in their portfolio.
Climate-related financial disclosures of Canadian financial institutions