UPDATE 1-Brazil's banks to incorporate climate change risks into stress tests

(Updates with additional central bank measures)

By Carolina Mandl

SAO PAULO, Sept 15 (Reuters) - Brazil's central bank announced on Wednesday new rules making it mandatory for banks to incorporate climate change-related risks into stress tests, starting in July 2022.

Central bank director Otavio Damaso said the new regulation aims to avoid potential financial instability stemming from climate-related risks.

The regulator also made it mandatory for banks to disclose climate-related information as part of financial reporting by July 2022, in accordance with the Task Force on Climate-Related Financial Disclosures (TCFD), set up by the G20's Financial Stability Board guidelines.

With these moves Brazil's central bank joins the ranks of other financial regulators demanding climate-related action from banks.

(Reporting by Carolina Mandl. Editing by Jane Merriman)