The Federal Reserve Board is inviting public comment on a proposed framework for managing climate-related financial risks for large banking organizations.
The proposed principles, which apply to only banks with more than $100 billion in total assets, address both the physical risks and transition risks associated with climate change.
The proposed principles would cover six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. The principles are similar to proposals issued by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.
The Federal Reserve Board intends to work with those agencies to promote consistency in the supervision of large banks through final interagency guidance.
“While I support seeking public input on the climate-related principles published by the Board today, I believe it is critical that any final principles complement the existing supervisory framework supporting the safety and soundness of financial institutions and that the Board consider the costs and benefits of any new expectations,” Federal Reserve Governor Michelle Bowman said.
Federal Reserve Governor Christopher Waller also released a statement on the matter.
“I cannot support this issuance of guidance on climate change. Climate change is real, but I disagree with the premise that it poses a serious risk to the safety and soundness of large banks and the financial stability of the United States. The Federal Reserve conducts regular stress tests on large banks that impose extremely severe macroeconomic shocks, and they show that the banks are resilient,” Waller said.
The comment period is open for 60 days after publication in the Federal Register.