Swiss financial watchdog FINMA has amended circulars requiring banks and insurers to disclose climate-related financial risks.

The updated ‘Disclosure – banks’ and ‘Disclosure – insurers’ circulars are set to become effective on 1 July.

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The decision will require large banks and insurance companies provide qualitative and quantitative information on financial risks they face from climate change.

In a statement, FINMA said: “Transparency by supervised entities about their climate-related financial risks is a first important step towards identifying, measuring and managing these risks.

“Accordingly, FINMA is clarifying its supervisory practice in the area of disclosure of climate-related financial risks.”

The move will also help in the sustainable development of the Swiss financial centre, the watchdog added.

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The circulars were amended following intensive dialogue with various interested parties and a public consultation.

Once effective, the institutions will release climate-related financial risks and impact on the business strategy, business model and financial planning.

They will also be required to disclose the process through which they identify, assess and manage such risks.

The institutes must also provide the central attributes of their governance structure related to climate-related financial risks.

The FINMA statement added: “The disclosure obligations are designed to be principles-based, giving the institutions flexibility when implementing them.

“FINMA has based its disclosure rules on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), an internationally recognised reference framework, and is thus introducing internationally compatible disclosure requirements.”

The move comes a year after the European Central Bank announced plans to ask lenders disclose climate-related risks, reported Reuters.