Proposed framework on climate-related financial risk management

On Friday, the Federal Reserve Board invited public comment on proposed Principles for Climate-Related Financial Risk Management for Large Financial Institutions.

The proposed principles would apply to banking organizations with more than $100 billion in total assets and 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 proposed principles are substantially similar to proposals issued by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, and the Board intends to work with those agencies to promote consistency in the supervision of large banks through final interagency guidance.

Comments on the proposal will be accepted for 60 days following Federal Register publication.

Publication and comment deadline update: Published 12/8/2022, with comments due by 2/6/2023.