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Banking industry

Federal Reserve, OCC, and FDIC Withdraw Climate-Related Financial Risk Management Principles

Strategic Insights

— 1 min read

The Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) withdrew the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions on October 16. These principles, finalized in October 2023, provided guidance for large banks to manage climate-related risks and protect broader financial stability. The principles included crucial guidance on net-zero commitments and climate scenario analysis.

Key Takeaways:

  • The withdrawal of the principles was announced by the Federal Reserve, OCC, and FDIC, reversing the guidance finalized in October 2023.
  • The principles provided critical guidance on net-zero commitments and climate scenario analysis for the effective management of physical and transition risks posed by climate change.
  • Jessye Waxman, Campaign Advisor with the Sierra Clubs Sustainable Finance campaign, stated that the science hasnt changed, the risks have only worsened, and the best practices for banks are clearer than ever.
  • Economists warn that the financial impacts of climate change could be comparable to the Great Depression, but experienced permanently.
  • The Sierra Club applauded the publication of the final principles in October 2023, recognizing that climate change poses a threat to financial stability.
  • The principles were crafted based on significant feedback during various interagency comment periods held from 2022 to 2023.
  • A coalition comment letter led by Public Citizen, signed by 68 organizations, was submitted to the Federal Reserve and OCC, while Sierra Club supporters also submitted comments to the Federal Reserve.

Statistics:

  • October 2023: The principles for Climate-Related Financial Risk Management were finalized.
  • 2022-2023: Interagency comment periods were held to craft the principles.
  • 68: The number of organizations that signed a coalition comment letter led by Public Citizen, submitted to the Federal Reserve and OCC.

Sources:

  • Federal Reserve, OCC, and FDIC withdrawing Principles for Climate-Related Financial Risk Management.
  • Ginny Roscamp, Senior Press Secretary, Federal Communications, Sierra Club, ginny.roscamp@sierraclub.org
  • Jessye Waxman, Campaign Advisor, Sierra Clubs Sustainable Finance campaign, statement.
  • Sierra Club, October 2023, applauding the publication of the final principles.
  • Public Citizen, coalition comment letter, signed by 68 organizations.
  • Sierra Club, official website, www.sierraclub.org.
  • Al Bawaba (Albawaba.com), Sustainable Finance, provided by SyndiGate Media Inc.

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