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Governance and Management of Climate Related Risks by French Banking Institutions: some good practices

This document released by the Autorité de Contôle Prudentiel et de Résolution (French Prudential Supervision and Resolution Authority) aims to encourage the dissemination of good practices and suggested lines of approach to all banking institutions authorised in France.

Key points
  • First principle: taking into account its pivotal role, the strategy of institutions, and more specifically its conception by the management bodies, and its implementation within the institution as well as the tools deployed to ensure its monitoring, should fully integrate the risks associated with climate change.
  • Second principle: the internal organisation of institutions, both in terms of the allocation of responsibility over all business lines, and in terms of the structuring of climate risk control, is critical in order to ensure their effective management, in line with the institutions’ strategic orientations.
  • Third principle: the material risks induced by climate change justify their full integration into the financial risk management framework of institutions, especially their risk appetite framework, but also the mobilisation of all qualitative tools, and, as far as possible, quantitative tools, in order to allow for a thorough assessment of these risks.
  • Fourth principle: in order to ensure both a better understanding and a better integration of climate-related risks, banks should disclose their strategy, their organisation, and their risk management mechanisms with regard to climate change.