FOR IMMEDIATE RELEASE: April 1, 2025
CONTACT: Carter Dougherty, carter@ourfinancialsecurity.org
OCC’s Retreat on Climate Risk at Odds with Economic Reality
WASHINGTON, D.C. – Yesterday, the Office of the Comptroller of the Currency (OCC) announced its withdrawal from participation in the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The climate principles covered large banks with over $100 billion in assets and were released jointly in 2023 by all three federal bank regulators: the OCC, the Federal Reserve Board, and the Federal Deposit Insurance Corporation (FDIC). Today’s withdrawal means that OCC bank examiners will no longer use the guidance to identify and mitigate climate-related vulnerabilities necessary to reduce the risk of climate-driven bank instabilities or failures that would hurt consumers and threaten the U.S. economy.
“The OCC is undermining legitimate efforts to understand how climate change creates compounding and concurrent risks for institutions and for the financial system, which may lead to crisis,” said Jessica Garcia, senior policy analyst for climate finance at Americans for Financial Reform Education Fund. “The Federal Reserve Board and the FDIC must continue using these sound principles to promote climate resilience for banks under their supervision and the households and communities they serve, rather than allowing banks to simply retreat from climate vulnerable communities.”
In the OCC’s announcement, Acting Comptroller Rodney Hood stated that the climate principles were unnecessary because the general existing supervisory guidance “applies to all activities … and includes potential exposures to severe weather events or natural disasters.” But regulators have long recognized the need for more specific guidance to deal with emerging risks like climate change.
For example, Federal Reserve Chair Powell voted in favor of the climate principles in 2023 and noted in February there are “significant economic consequences” because “both banks and insurance companies are [already] pulling out of [climate vulnerable] areas,” and “if you fast forward 10 or 15 years, there are going to be regions of the country where you can’t get a mortgage.”
“The old backwards-looking style of risk management and monitoring is insufficient for the level, frequency, and speed of these unfolding climate risks.” said Kelsey Condon, policy counsel for climate finance at AFREF. “The OCC’s withdrawal of guidance that was intended to assist banks as they address emerging, forward-looking risks — such as a sizable portion of homeowners losing access to property insurance each year — leaves our banks, neighbors, and economy more exposed.”
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