The Globe and Mail reports in its Tuesday edition that Canada's central bank and financial regulator are joining a group of banks and insurance companies to gauge how risks related to climate change and a transition toward a low-carbon economy could affect the financial system.
The Globe's Mark Rendell writes that the Bank of Canada and Office of the Superintendent of Financial Institutions (OSFI) announced a pilot project on Monday that will look at various "climate change scenarios" and assess how they could affect bank and insurance company balance sheets.
Financial institutions are looking for better ways to assess how their large and diffuse portfolios will be affected by everything from higher carbon taxes to increased flooding.
"Everyone, including the financial sector, will have to adjust to the new reality of climate change. The shape of that new reality will depend on many complex issues and on much that remains uncertain," OSFI superintendent Jeremy Rudin said in a statement to the Globe. Two banks (Royal Bank of Canada and Toronto-Dominion Bank) and four insurance companies (Intact Financial, Manulife Financial, Sun Life Financial and Co-operators Group) are taking part in the initiative.
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