With climate change one of the biggest emerging risks, the Reserve Bank of India (RBI) released a draft standard disclosure framework on climate-related financial risks for regulated entities (REs). As per RBI, There is a need for a better, consistent and comparable disclosure framework for REs, as inadequate information about climate-related financial risks can lead to mispricing of assets and misallocation of capital by them. Res should detail the governance processes, controls and procedures used to identify, assess, manage, mitigate and monitor climate-related financial risks and opportunities. All scheduled commercial banks, financial institutions and larger non-banking financial companies (NBFCs) will have to disclose their governance, strategy and risk management processes from fiscal 2026 and specify metrics and targets from fiscal 2028 onwards. Banks and non-bank financial firms will be required to detail the impact of climate-related risks and opportunities on their businesses, strategy and financial planning, while taking into consideration different climate scenarios and also have to disclose how, and to what extent their processes for climate-related financial risks and opportunities are integrated into and inform their overall risk management. REs will also have to disclose their progress towards their climate-related targets as well as any targets required by statute or regulation.

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