The Isle of Man Financial Services Authority (FSA) has published new guidance aimed at increasing awareness among regulated firms of the financial risks associated with climate change and nature loss.

The document also outlines the authority’s expectations regarding how firms should approach these risks within the existing regulatory framework.

It notes: ‘Whilst it is uncertain how and when climate and nature risk events will materialise, there is a high degree of certainty that some financial risks will materialise because of climate change and nature loss. ‘

The guidance supports the broader objectives set out in the Isle of Man Sustainable Finance Roadmap, a government initiative designed to establish the island as a hub for sustainable finance.

According to the FSA, this guidance marks a ‘key initial step’ in helping the island’s regulated sector align with global trends in sustainable finance.

The Authority’s focus is on creating a regulatory platform that allows businesses to develop sustainable financial products and services while maintaining high standards of oversight.

A spokesperson from the FSA said the guidance ‘aims to give a high-level understanding of how climate and nature loss risks can create financial and other risks, as well as the expectations that the Authority has of firms that identify a material risk’.

The document does not introduce new regulatory requirements.

Instead, it emphasises how existing risk management frameworks can incorporate environmental considerations.

It also stresses the importance of proportionality and materiality, noting that most of the guidance applies only to firms that have identified material climate or nature-related risks through their own assessments.

Finance Isle of Man, the governmental agency promoting the island's financial services sector, has reported positive feedback from industry stakeholders.

The FSA reiterated its commitment to supporting the island’s efforts to become a sustainable and competitive international financial centre, calling the initiative a ‘significant project for the island’s future’.