Regulatory Alerts2024-09-13
Guidelines on Environmental Risk Management for Banks
The Central Bank of the Republic of Azerbaijan issues these guidelines to require banks to systematically integrate physical and transition environmental risks into their corporate governance, risk appetite, and business strategies. Institutions must establish designated board oversight, apply a three-lines-of-defense monitoring model, and evaluate client and portfolio exposures using sector-specific criteria alongside Scope 1-3 emission measurements. The framework further mandates regular NGFS-aligned scenario analysis, stress testing, and TCFD-compliant annual disclosures to safeguard medium-to-long-term financial stability.
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