Agency Guidelines Confirm That Climate-Related Financial Risk Is Real

Highlights

• The U.S. Department of the Treasury's Office of the Controller of the Currency, Federal Reserve Board and Federal Deposit Insurance Corp. have issued joint guidelines on climate-related financial risk for large financial institutions.
• The guidelines encourage large financial institutions to develop their own procedures to identify, measure, monitor and control for climate-related financial risks and ensure that their public statements are consistent with internal strategies, risk appetite statements and risk management frameworks.
• The guidelines also describe how climate-related financial risks can be addressed in various risk categories, including credit, liquidity, operational, legal and compliance, along with other financial and nonfinancial risks.