The International Monetary Fund has published guidance urging financial regulators and supervisors to address material climate-related risks through their core financial stability, safety and soundness, market integrity and investor protection mandates. Authorities should use existing risk-based supervisory frameworks aligned with international standards rather than deploy prudential or conduct tools to steer green investment or substitute for fiscal and environmental policy. Banking supervisors should set expectations for governance, risk management, scenario analysis, reporting and disclosure, while using supervisory measures to address identified weaknesses. Insurance oversight should account for insurers’ investment, underwriting, physical and litigation risks, as well as protection gaps that may affect other financial sectors. Securities regulators should promote comparable disclosures, assess whether existing frameworks cover climate-related instruments and address greenwashing risks. Emerging market authorities should allocate resources according to evidence-based assessments of climate risk materiality. Where risks are not material, the IMF recommends prioritizing fundamental prudential and conduct frameworks. Where they are material, climate risks should be integrated proportionately into core supervision and capacity-building efforts.
2026-02-20International Monetary Fund
International Monetary Fund issues guidance on materiality-based climate risk supervision
The International Monetary Fund recommends integrating material climate-related risks into existing supervisory frameworks and core financial stability and market integrity mandates. Regulators should align with international standards but avoid using supervisory tools to direct green investment. Emerging market authorities should base priorities and resource allocation on evidence of risk materiality.