Taiwan unveils climate risk guidelines for banks and insurers

Taiwan’s Financial Supervisory Commission (FSC) has issued guidelines for banks and insurers on the climate risk disclosures they will be required to make from 2023 onwards.

According to Regulation Asia, the guidelines require banks to establish a mechanism to identify climate-related financial risks and opportunities in accordance with the scale and nature of their companies.

The four key aspects of disclosure will include governance, strategy, risk management and metrics and targets. On the topic of risk management information, relevant internal policies and mechanisms must be formulated and review on a regular basis in order to ensure guideline compliance.

The FSC remarked that banks who focus on real estate lending and high emissions industries will be particularly impacted by climate change, so such exposures must be included in disclosures.

Banks and insurers will be able to disclose climate risk-related financial risks on their official websites or involve them in sustainability reports. Flexibility will be provided at first in cases where banks cannot disclose complete information, but banks will be expected to bolster the content – qualitative and quantitative – in their disclosures year-by-year.

The disclosure requirements are a part of Taiwan’s Green Finance Action Plan 2.0, which was previously issued in August 2020.

The implementation of the climate risk disclosure requirements will begin next year, with the first disclosures expected to be published at the end of June 2023.

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