Are you a South African insurer thinking about climate change? These are the documents you should read

The last two months have been eventful in terms of climate change discussion and guidance, with the South African regulator publishing a number of documents which may be useful for South African insurers who are starting to consider how to assess and report on climate change for their businesses.

We’ve compiled a quick guide of the documents below:

1.???????? The Prudential Authority’s Climate Roadmap 2024-2026

This one-page document summarises the Prudential Authority’s s regulatory and supervisory response to climate-related risks to date and outlines the strategy for the next two years.

?2.???????? The Prudential Authority’s Guidance Notice 1 of 2024: Guidance on climate-related governance and risk practices for insurers and Guidance Notice 2 of 2024: Guidance on climate-related disclosures for insurers

Guidance Notice 1 sets out guidelines aimed at assisting insurers in complying with the requirements of GOI 3 (Risk Management and Internal Controls for Insurers) and GOI 3.1 (Own Risk Solvency Assessment (ORSA) for Insurers) as these prudential standards apply to climate-related risk for insurers. It aims to illustrate approaches that should be considered in managing an insurer's climate-related risks.

Guidance Notice 2 provides guidance to insurers regarding climate-related disclosures, taking into consideration the International Sustainability Standards Board climate-related disclosures standard, under the four thematic areas of governance, strategy, risk management, and metrics and targets.

?3.???????? The Prudential Authority’s Feedback Note on Development of Guidance Notices for Climate-related disclosures, governance and risk practices for banks and insurers?

The process for developing the aforementioned guidance notices was notable because it was informed by feedback from the financial services sector.?

This document details the process undertaken to finalise the Guidance Notices for banks and insurers' climate-related disclosures, governance, and risk practices. It provides feedback on the consultation process and comments received. This feedback note is for informational purposes and may be useful for banks and insurers in their approach to climate-related disclosures, governance, and risk management.?

4.???????? The Prudential Authority’s Climate Risk Practices Observation Report?

Climate-related risks were discussed with 22 selected financial institutions regulated by the Prudential Authority (PA) in the 2023 calendar year as a ‘flavour-of-the-year’ topic. This observations report provides high-level feedback on the discussions held with these institutions.

?5.???????? The South African Reserve Bank’s Financial Stability Review

?The SARB has included cyber risk in its risk and vulnerability matrix of its Financial Stability Review as perpetual long-term risk that poses continuous risks to financial stability.? In this document the main concerns around climate risk and its threat to financial stability are outlined.