ECIIA submitted its views on the consultative document of the principles for the effective management and supervision of climate-related financial risks.
The principles proposed in the consultation document realigned with the existing regulations (eg ECB guidelines on climate and environmental risks, MAS guidelines for environmental risk management for banks…) and describe the role of internal auditors, based on the Three Lines Model.
Internal auditors play an important role in climate-related risks and provide independent and objective reasonable assurance and insight to the board and management, on all aspects of governance, risk management, and internal control related to climate risks. We observe that climate risks are broader than financial, they include reputational risks, operational risks, compliance risks. There is a need for a strong internal control system (efficient and effective), as part of integrated risk management (e.g. the COSO model that integrates the sustainability dimension, or the ERM model that also includes sustainability issues).
Read ECIIA’s input here.