The head of Canada’s Banking Supervisory Authority said Monday that it will increase the reserves that banks must hold to protect themselves from the risks of climate change.

Peter Routledge, who heads the Office of the Superintendent of Financial Institutions (OSFI), explained that imposing the increase this year is not likely, but it is still important for banks to provide capital reserves during the current decade. To protect against a possible increase in volatility.

Speaking at the Canadian Bank CEOs Conference hosted by Royal Bank, Mr. Routledge said it was important to increase resilience in the face of the physical risks of climate change and transformation risks, so that the global economy moves towards carbon neutrality.

Even if the world begins cutting emissions this decade with a more measured approach, he said, action may be delayed until the next decade, leading to a more volatile and volatile transition.

Mr. Routledge explained that OSFI would also enter into dialogue with financial institutions and hoped to be able to issue guidance on climate risk management later this year.

Royal Bank CEO Dave McKay said it is imperative that any fiscal policy on climate change risks take into account Canada’s global competitiveness.

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