Federal Banking Agencies Finalize Interagency Climate-Related Risk Management Principles

Last week, the Federal Reserve Board ("FRB"), Federal Deposit Insurance Corporation ("FDIC"), and Office of Comptroller of the Currency ("OCC") (together, the "Agencies") released a final interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions (the "Principles").

The final Principles are substantially similar to what each of the Agencies issued separately over the course of 2021 and 2022, as we discussed here. In response to comments, the final guidance includes changes from the proposal that include clarification that the guidance is applicable to large foreign banking organizations and the different roles of an institution's board of directors vs. management. Like the proposed guidance, the final Principles contain "high-level principles covering six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. Additionally, the