RBI LAUNCHES CLIMATE RISK INFORMATION SYSTEM
The Reserve Bank of India (RBI) announced the creation of a Climate Risk Information System (RB-CRIS) to address the growing risks of climate change to the financial system.
This initiative aims to help regulated entities assess climate risks to ensure the stability of their financial operations.
IMPORTANCE OF CLIMATE RISK ASSESSMENTS
- Financial Stability: It is essential for banks and financial institutions to conduct climate risk assessments to maintain the stability of their balance sheets and the broader financial system.
- Need for Quality Data: Effective assessments require high-quality data about local climate conditions, forecasts, and emissions. Currently, available data has gaps, such as fragmented sources and varying formats.
FEATURES OF CLIMATE RISK INFORMATION SYSTEM
- Data Repository: The RB-CRIS will include two main components:
- Web-Based Directory: This part will list various data sources (e.g., meteorological, geospatial) and will be publicly accessible on the RBI’s website.
- Data Portal: This will contain processed datasets in standardized formats and will be available to regulated entities in phases.
- Phased Launch: The RBI plans to start with the web-based directory, followed by a gradual rollout of the data portal to ensure smooth adaptation for regulated entities.
GUIDELINES FOR REGULATED ENTITIES
- On February 28, 2024, the RBI issued draft guidelines for a Disclosure Framework on Climate-Related Financial Risks. These guidelines require regulated entities to disclose information in four key areas:
- Governance
- Strategy
- Risk Management
- Metrics and Targets
- The aim is to inform stakeholders—such as regulators, investors, and customers—about the climate risks faced by these entities and their strategies to address them.
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