FOR IMMEDIATE RELEASE
December 2, 2022
Fed Takes Critical First Step in Managing Banks’ Climate Risk
WASHINGTON, D.C. — The Federal Reserve today proposed climate-related supervisory guidance for major banks that represents an important and long overdue step to safeguard the banking system from the growing safety and soundness risks associated with climate change.
“These supervisory principles are a critical first step to helping banks understand and manage the risks they face due to climate change and the ongoing transition to a low-carbon economy,” said Alex Martin, senior policy analyst at Americans for Financial Reform Education Fund. “The final principles should establish clear expectations for how major banks should align their internal strategies with their public climate-related commitments, as well as outline safe, equitable, and just risk management methods that do not harm consumers or exacerbate racial, economic, and environmental injustice.”
The guidance, after final approval, would apply to banks with over $100 billion in assets. The proposed principles, now open for public comment for 60 days, closely align with principles released in the last year by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
AFR-EF submitted comments to an early version of the principles issued by FDIC. A PDF of the joint comment can be found here and a PDF of the individual comment can be found here. This action follows on the heels of its endorsement of a 2021 Financial Stability Oversight Council report that found climate change and its drivers pose an emerging threat to financial stability.