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June 21, 2022

Climate Risk and Canadian Banks: Is More Capital Required?

  • As regulators generate new rules for financial institutions regarding the monitoring, disclosure and mitigation of climate-related risks, a key issue is: should banks be required to increase their capital buffers?
  • Author and C.D. Howe Institute Fellow-in-Residence Glen Hodgson examines this crucial question.
  • The Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) recently released scenarios on the implications of climate change and the transition to net-zero greenhouse gas emissions. With this as a backdrop, the author considers Canadian banks’ options for managing climate risk and whether more capital buffers are needed – especially in a country where capital ratios are already well above the regulatory floor.
Glen Hodgson

Glen Hodgson has 36 years of experience in global and Canadian macro-economics, international trade analysis and finance, fiscal and tax policy, and other “big picture” topics.