TORONTO — The head of Canada's banking regulator says he's looking to increase how much capital banks need to hold to protect against climate change risks.
Peter Routledge, who leads the Office of the Superintendent of Financial Institutions, says that while it wouldn't likely happen this year, it's important banks build up capital buffers this decade to guard against potentially increasing volatility.
Speaking at RBC's Canadian bank CEO conference, Routledge said it's important to increase resilience to both the physicals risks of climate change, and the transition risks as the global economy shifts towards net zero emissions.
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He says that while the world may start moving away from emissions this decade in a more measured approach, action could be delayed until next decade to create a more rushed and volatile transition.
Routledge says the regulator will also begin a dialogue with financial institutions as it looks to produce climate risk management guidelines later this year.
RBC chief executive Dave McKay said it was essential that any financial policies on climate change risk consider Canada's global competitiveness.
This report by The Canadian Press was first published Jan. 10, 2022.
