The Office of the Superintendent of Financial Institutions (OSFI) in Canada has modified its Guideline B-15, focusing on Climate Risk Management. These changes aim to harmonize disclosure requirements with those of the Canadian Sustainability Standards Board (CSSB), which introduced its voluntary standards in December 2024. The CSSB standards are Canada's first general sustainability disclosure standards, inspired by the International Sustainability Standards Board (ISSB).

This guideline applies to all federally regulated financial institutions, including Domestic Systemically Important Banks and Internationally Active Insurance Groups based in Canada. Notable updates involve extending the deadline for reporting Scope 3 greenhouse gas emissions to 2028, in line with CSSB standards, and clarifying disclosure expectations for climate-related financial information for managed assets, both on and off-balance sheet. There's also a 2029 implementation date set for disclosing off-balance sheet Scope 3 emissions.

A consultation on the disclosure expectations for off-balance sheet emissions is planned later this year.

From a governance standpoint, financial institutions are required to establish structures and clear roles for overseeing climate-related risks. Strategically, these institutions must integrate such risks into their operations and strategic planning. Operationally, they should use climate scenario analysis to evaluate impacts on their risk profiles and business models, both through internal analysis and OSFI-led exercises.

The extension to 2028 for Scope 3 emissions gives banks more time to enhance their methodology and data collection. Nonetheless, continuous investment in improving data collection, analysis, and capabilities for managing climate risks remains essential.

The updated OSFI B-15 guidelines emphasize the importance of managing climate risks for Canadian banks. Although there is leniency with the new emission reporting timeline, comprehending, managing, and disclosing climate-related risks is still a significant obligation.