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Details
Deep dive
Background
Guideline B-15: Climate Risk Management is a regulatory framework introduced by the Office of the Superintendent of Financial Institutions (OSFI) in Canada to address climate-related risks within the financial sector. Released in March 2023 and updated in February 2025, the guideline fits within Canada’s broader strategy for addressing climate change and transitioning towards a clean economy, as set out in the Pan-Canadian Framework on Clean Growth and Climate Change. Guideline B-15 aims to ensure that federally regulated financial institutions (FRFIs) effectively identify, assess, and manage climate-related risks, including those associated with greenhouse gas (GHG) emissions. It is a major step in aligning Canada’s financial sector with global climate goals, such as the Paris Agreement, and reflects the growing recognition of climate change as a systemic risk to financial stability.
Affected institutions
Guideline B-15 applies to federally regulated financial institutions (FRFIs), including banks, insurance companies, and trust and loan companies. This includes major Canadian banks, like RBC, TD, and Scotiabank, as well as large insurers like Manulife and Sun Life. Around 400 institutions fall under OSFI’s jurisdiction, though the requirements of Guideline B-15 (see below) initially apply to the largest and most systemically significant entities. The guideline’s initial focus on large institutions reflects their disproportionate exposure to climate-related risks and their capacity to lead the transition to a low-carbon economy.
Requirements
Guideline B-15 requires FRFIs to disclose comprehensive information about their exposure to climate-related risks, including GHG emissions associated with their lending, investment, and underwriting activities. Specifically, institutions must report on Scope 1 (direct), Scope 2 (indirect), and Scope 3 (financed) emissions. Reporting must align with the TCFD framework, covering governance, strategy, risk management, and metrics/targets related to climate risk. Institutions are expected to use standardized methodologies for calculating emissions such as the latest GHG Protocol Corporate Accounting and Reporting Standard and the latest GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Disclosure requirements for Scope 1 and Scope 2 emissions took effect in 2024 for Domestically Systemically Important Banks (D-SIBs) and Internationally Active Insurance Groups (IAIGs) while Small and Medium-Sized Deposit Taking Institutions (SMSBs) and all other federally regulated insurers in Canada began in 2025. All institutions are expected to start disclosing their Scope 3 emissions in 2028. The Guideline is flexible about the location and format of the GHG emissions disclosures. They could form part of a Report to Shareholders or an independent document such as an Environmental, Social, and Governance (ESG) Report or Climate Risk Report. In any case, the GHG emissions disclosures are expected to be publicly accessible on the institution's website.
Penalties for noncompliance
Noncompliance with Guideline B-15 can result in significant consequences for financial institutions. While the guideline does not establish explicit penalties, failure to meet the guideline’s requirements might lead to increased regulatory scrutiny, reputational damage, and potential restrictions on business activities. OSFI recently integrated climate risk management into its supervisory framework, meaning that noncompliance with Guideline B-15 could result in a lower Overall Risk Rating (ORR).
