Contents
1. Why this matters
Canadian banks, insurers, trust companies, and other federally regulated financial institutions (FRFIs) are now required to disclose climate physical-risk exposures under OSFI Guideline B-15. The largest institutions — Category I FRFIs such as D-SIBs and IAIGs — began reporting for fiscal year-ends on or after October 1, 2024. Category II FRFIs (smaller banks, credit unions, life insurers, P&C insurers) follow for fiscal year-ends on or after October 1, 2025.
In parallel, the Canadian Sustainability Standards Board (CSSB) finalised CSDS 1 and CSDS 2 in December 2024, effective for annual reporting periods beginning on or after January 1, 2025. CSDS 2 is substantially aligned with IFRS S2. Adoption is currently voluntary — the Canadian Securities Administrators (CSA) paused its mandatory-rule project in April 2025 — but investor pressure, lender requirements, and OSFI's own alignment to the CSSB standards make CSDS 2 the de facto disclosure framework for large Canadian issuers and real estate portfolio owners.
2. OSFI Guideline B-15 — Climate Risk Management
Guideline B-15 applies to all FRFIs except foreign bank branches and already-consolidated subsidiaries. It is structured in two chapters: Chapter 1 covers governance and risk-management expectations (including the five principles); Chapter 2 covers climate-related financial disclosures, re-aligned in 2024 to the IFRS S2 / CSSB four-pillar structure.
Key dates
| Requirement | Category I (D-SIBs, IAIGs) | Category II (SMSBs, insurers) |
|---|---|---|
| Governance, Strategy, Risk Management | FY ending on/after Oct 1, 2024 | FY ending on/after Oct 1, 2025 |
| Metrics & Targets (incl. Scope 1 & 2 GHG) | 2025 | 2026 |
| Scope 3 emissions (on-balance-sheet) | 2028 | 2028 |
| Industry-based physical-risk metrics | 2028 | 2028 |
Physical-risk expectations
B-15 adopts the TCFD split between acute (event-driven extremes) and chronic (gradual climate shifts) physical risks. It requires FRFIs to identify the hazards material to their portfolio and to disclose the geophysical location of exposures. OSFI readiness consultations have explicitly flagged that FRFIs should capture latitude/longitude and refine their geocoding.
Supervisory returns are filed separately from public disclosures, via OSFI's Regulatory Reporting System (RRS):
- IC1 — Physical Risk Return (P&C insurers): insurance revenue, policy count, claims, claim count, reinsurance recoveries, total insured value, and probable maximum loss (PML) at 100-year and 250-year return periods, reported by peril and geography. Perils named: flood, wildfire, severe convective storms, hurricanes. Current granularity is province/region; OSFI has signalled that FSA-level granularity will be required in future returns.
- Deposit-taking institutions: asset exposures by geophysical location, with granular real estate data expected for physical-risk linkage.
How ClimaInsight outputs are structured to inform these requirements
| B-15 requirement | ClimaInsight output |
|---|---|
| Geophysical location of exposures | Latitude/longitude per property (Pro, via address geocoding); FSA-level (Free) |
| Acute vs chronic physical-risk split | Flood and wildfire labelled Acute; heat stress labelled Chronic, in PDF, Excel, and this documentation |
| Hazard identification (flood, wildfire, heat) | Three hazards scored per property using authoritative federal datasets (NRCan FSI, NWRI, CMIP6 Humidex) |
| Portfolio concentration (geographic) | FSA-level concentration analysis with 10% / 25% concentration flags; province rollup |
| IC1 geographic granularity | Province and FSA concentration tabs in the Excel export |
| Methodology disclosure | Dedicated methodology appendix in every Pro PDF, plus published methodology at /docs/methodology/ |
3. CSDS 2 / IFRS S2 — Physical-Risk Disclosures
CSDS 2 (Canadian Climate-related Disclosures) was issued by the CSSB in December 2024 and is effective for annual reporting periods beginning on or after January 1, 2025. Adoption is currently voluntary. CSDS 2 is substantially aligned with IFRS S2, with limited Canadianised transition reliefs (Scope 3 deferred one extra year; quantitative scenario analysis deferred to reporting periods beginning on or after January 1, 2027).
The anchor disclosure — paragraph 29(c)
This is the single most product-relevant disclosure in IFRS S2 / CSDS 2 for property-focused portfolios. For a REIT, bank, or insurer whose balance sheet is dominated by real estate, this paragraph effectively requires a property-by-property physical-risk screen, aggregated to portfolio level, with a scenario and time-horizon attached.
Four-pillar alignment
| IFRS S2 pillar | Physical-risk disclosure | ClimaInsight output |
|---|---|---|
| Governance | Board oversight of physical-risk exposures | Methodology documentation and audit trail to support board reporting |
| Strategy | Identify acute and chronic risks (paras 10–12); describe horizons (para 29a) | Acute (flood, wildfire) and chronic (heat stress) hazards labelled separately; horizons noted in methodology |
| Strategy — para 29(c) | Amount and percentage of assets vulnerable | Physical Risk Exposure Summary in Pro PDF and Summary sheet of Pro Excel — reports counts, metric-weighted amounts, and percentages at High+ risk, structured to inform this disclosure requirement |
| Strategy — para 22 | Climate resilience using scenario analysis | Heat projections use CMIP6 SSP2-4.5 (moderate pathway); quantitative multi-scenario analysis is on the ClimaInsight roadmap |
| Risk Management | Processes to identify, assess, and prioritise | Repeatable pipeline: geocode → hazard overlay → risk rating → portfolio aggregation; snapshots persisted for year-over-year comparison |
| Metrics & Targets | Industry-based metrics (e.g. real estate by geography) | Per-hazard risk distribution, FSA-level concentration, metric-weighted critical exposure (Pro) |
4. What you get from ClimaInsight
Every Pro assessment produces, as standard output:
- Per-property lat/lon and FSA — relevant to geophysical-location disclosure expectations and geographic concentration analysis.
- Per-hazard risk rating on a consistent five-level scale across flood, wildfire, and heat stress.
- Acute / chronic labelling on every hazard, in PDFs, Excel headers, and this documentation.
- Physical Risk Exposure Summary in the Pro PDF, structured to inform IFRS S2 / CSDS 2 paragraph 29(c) disclosure, reporting properties and metric-weighted amounts at High or Very High risk, per hazard and composite.
- FSA and province concentration analysis, with 25% and 10% concentration flags relevant to portfolio-concentration-risk management.
- Methodology appendix with data sources, scenario (CMIP6 SSP2-4.5 for heat), time horizon (2041–2060), and classification rules — the audit trail regulators expect.
- Excel workbook with Summary (including Physical Risk Exposure Summary rows), Properties, and FSA Concentration sheets — structured to support internal disclosure workpapers.
Supporting your disclosure workflow
If you are preparing physical-risk disclosures informed by B-15 or CSDS 2 / IFRS S2, run your portfolio through ClimaInsight Pro to generate structured PDF and Excel outputs you can reference in your disclosure process.
5. Limitations & methodology notes
- Scenario coverage: heat projections use a single CMIP6 scenario (SSP2-4.5, 2041–2060 ensemble median). IFRS S2 / CSDS 2 expects multi-scenario analysis including a 1.5°C-aligned pathway; quantitative multi-scenario output is on the ClimaInsight roadmap.
- Baseline flood and wildfire: current flood and wildfire ratings reflect baseline federal datasets rather than forward-looking projections. Filers should disclose this assumption alongside their results.
- Hazards covered: flood, wildfire, and heat stress only. OSFI's IC1 return for P&C insurers additionally requires severe convective storms and hurricanes — these are on the roadmap and are not covered by ClimaInsight today.
- PML / return periods: ClimaInsight does not produce probable-maximum-loss figures at 100-year or 250-year return periods. For IC1 Sub-Table IC1-B, insurers need to combine ClimaInsight exposure output with a catastrophe-model PML source.
- Screening level: ClimaInsight is built for portfolio screening, concentration analysis, and disclosure support. It is not a substitute for site-specific engineering assessments, hydraulic flood modelling, or insurance underwriting.
- Not legal or regulatory advice: this page is a product-alignment reference, not legal, accounting, or regulatory advice. Filers should consult their auditors and regulatory counsel on the specific form and content of their B-15 and CSDS 2 disclosures.