The Swiss Financial Market Supervisory Authority FINMA has analysed how the largest banks and insurance companies disclose their climate-related financial risks for the first time in accordance with the FINMA disclosure circulars. FINMA has set out its key findings in this regard in guidance.
The largest banks and insurance companies (institutions in supervisory categories 1 and 2) must describe their significant climate-related financial risks in accordance with Circulars 2016/1 “Disclosure – banks” and 2016/2 “Disclosure – insurers”. In doing so, they must describe the impact of climate risks on the business and risk strategy as well as their effects on existing risk categories. In addition, institutions must disclose the risk management structures and processes they use to identify, measure and address risks. This includes quantitative data and a description of the methodology used. Institutions must also explain the governance structure they have in place to address climate-related financial risks. Finally, they must evaluate how material they consider the risks to be and which criteria and assessment methods are taken into account for this assessment.
FINMA has now analysed the first disclosures on climate-related financial risks that were included in the institutions’ annual reporting on the financial year 2021. This guidance sets out the key findings from these disclosures and shares them with all supervised banks and insurance companies. Certain findings may also be helpful for institutions that voluntarily disclose their climate risks or are preparing for this step.