The Office of the Superintendent of Financial Institutions’ (OSFI) decision to join a global policy group devoted to sustainable finance is a positive for the Canadian banking sector, as it gives Canada a bigger voice at the table, says Moody’s Investors Service.
In a new report, the rating agency said that OSFI joining the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) represents a positive for the Canadian banking system “because it gives the regulator an opportunity to influence the international dialogue about climate-related financial risk mitigation.”
The network was launched in 2017 to develop best practices for the banking sector in climate-risk management.
Joining the group should also enhance OSFI’s ability to include climate risks in its regulatory oversight activities and serves to enhance co-ordination among regulators and central bankers, Moody’s said.
“We believe globally coordinated efforts on climate risk management help financial institutions understand the consequences of climate change for their business, support their efforts to develop important climate risk management capabilities and capitalize on opportunities presented by climate change,” it said.
The NGFS began with eight founding members. That has now grown to 102 members and 16 observers from global banking regulators, central banks and financial institutions, the report noted.
“More members contributing to knowledge sharing and the evolution of climate risk management will expedite progress and promote global awareness and adoption,” Moody’s said.