RESERVE BANK CLIMATE RISK INFORMATION SYSTEM (RB-CRIS)

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Context: 

The Reserve Bank proposes to create a data repository namely RB-CRIS.

About Reserve Bank Climate Risk Information System (RB-CRIS)

This is an initiative of RBI which aims to enhance climate risk assessments by providing high-quality, standardized data to all.

It comprises two parts.  The first part will be a web-based directory, listing various data sources, (meteorological, geospatial, etc.).

It will be publicly accessible on the RBI website. 

The second part will be a data portal which will consist of processed data in standardised formats. 

Only the regulated entities will have access to the data in a phased manner.

Need for the CRIS

Climate change is emerging as one of the significant risks to the financial system. 

Climate risk assessments are crucial for regulated entities to ensure the stability of their 

balance sheets and that of the financial system. 

Such an assessment requires high-quality data relating to local climate scenarios, climate forecasts, and emissions. 

There are various gaps in the available climate-related data such as fragmented and varied sources, differing formats, frequencies and units. 

To bridge these gaps Climate Risk Information System is needed.

Draft disclosure framework on climate-related financial risks

The Reserve Bank of India (RBI) released a draft disclosure framework on climate-related financial risks on February 28, 2024. 

The framework requires regulated entities (REs) to disclose information on the following four areas: governance, strategy, risk management, and metrics and targets. 

The framework is aligned with international standards set by the Task Force on Climate-Related Financial Disclosures.

The framework's goals are to:

• Increase transparency and accountability in financial institutions 
• Help stakeholders understand the risks and how REs are addressing them 
• Align with India's net-zero goals by 2070.

Applicability

The framework is mandatory for Indian banks, financial institutions, and top NBFCs. 

Disclosure requirements 

The requirements for disclosures vary based on the size and complexity of the regulated entities (REs) operations. 

The Task Force on Climate-related Financial Disclosures (TCFD) is an industry-led group that provides recommendations for how organizations can report on their climate-related financial information. The Financial Stability Board (FSB) created the TCFD in 2015.

Important articles for reference 

Financial Stability Board (FSB)

Green Deposits

Sources:

https://www.business-standard.com/markets/capital-market-news/rbi-announces-creation-of-climate-risk-information-system-124100900398_1.html

https://www.livelaw.in/law-firms/law-firm-articles-/rbi-draft-disclosure-framework-climate-related-financial-risks-266707

PRACTICE QUESTION Q.Consider the following statements about the Reserve Bank Climate Risk Information System:  It aims to enhance climate risk assessments by providing high-quality, standardised data to all. Its web-based directory, lists various data sources, meteorological, geospatial, etc. The access to its data portal is public to all. Which of the above  statements are correct?  A. 1 and 2 only B. 2 and 3 only C. 1, 2 and 3 only D. None Ans: A Explanation: Statement 1 is correct Reserve Bank Climate Risk Information System (RB-CRIS) is an initiative of RBI which aims to enhance climate risk assessments by providing high-quality, standardized data to all. Statement 2 is correct It comprises two parts.  The first part will be a web-based directory, listing various data sources, (meteorological, geospatial, etc.). It will be publicly accessible on the RBI website. Statement 3 is incorrect The second part will be a data portal consisting of datasets (processed data in standardised formats).  The access to this data portal will be made available only to the regulated entities in a phased manner.