India to Make Climate Risk Disclosures Mandatory for Banks - Bloomberg
India to Make Climate Risk Disclosures Mandatory for Banks - Bloomberg
India to Make Climate Risk Disclosures Mandatory for Banks
- Financial institutions must start disclosing from FY 2025-26
- Entities to meet climate targets 2027-28 onward, says RBI
The Indian central bank will require lenders to disclose climate finance risks starting in April 2025 and to meet certain climate targets beginning in 2027.
“Inadequate information about climate-related financial risks can lead to mispricing of assets and misallocation of capital by them,” the Reserve Bank of India said in the proposed requirements for a “better, consistent and comparable disclosure framework” for banks and large non-bank financial companies.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”