Principle 1 – Oversight and responsibility of climate-related financial risk exposures
1.
The board and senior management of financial firms should have an appropriate understanding of the organization’s climate-related financial risk exposures and their potential impact to facilitate effective oversight.
1.1
The financial firm should ensure that the board and senior management have an adequate understanding of climate-related financial risks and that senior management is equipped with the appropriate skills and experience to manage and oversee these risks.
1.2
Financial firms should have in place a sound climate-related financial risk management framework as part of their overall business strategy, including considering the risk appetite specific to climate-related financial risks. The risk appetite should be defined, approved and overseen by the board. The board should be able to provide evidence of its ongoing oversight of these risks, particularly when they are deemed to be material.
1.3
Certain functions related to the management of climate-related financial risks may be delegated, but, as with other risks, the board is ultimately responsible and accountable for monitoring, managing and overseeing climate-related risks for the financial firm.
1.4
Where required, financial firms should ensure that the board and senior management actively keep up to date to develop and maintain sufficient knowledge and skills to understand and assess the impact of climate-related financial risks on the financial firm and the broader financial sector, including by providing training. In addition, financial firms should also provide capacity building and training to relevant personnel to enhance management of climate-related financial risks.