FRB Proposes Climate-Related Financial Risk Management Principles

Last week, the Federal Reserve Board ("FRB") proposed principles for climate-related financial risk management for large financial institutions. The proposed guidance is open for comment until 60 days after publication in the Federal Register.

The FRB's proposed guidance is very much in line with guidance previously issued by the OCC and FDIC in December 2021 and March 2022, respectively. The FRB staff noted that they had worked with the staffs of the OCC and FDIC in this proposal with an eye toward all three agencies issuing interagency guidance. As we speculated in June when the Basel Committee on Banking Supervision issued its principles on climate-related financial risk management, the FRB may have been waiting for the Vice Chair of Supervision seat to be filled before issuing its version of the principles.