U.S. Federal Reserve Announces Climate Scenario Analysis Program

On September 29, 2022, the Board of Governors of the Federal Reserve System ("Fed") announced that six of the largest U.S. banks will participate in a first-of-its-kind climate scenario analysis program. The Fed will provide participating banks with "climate scenario narratives" comprising climate, economic, and financial variables that the banks will use to analyze the impact of the scenarios on specific portfolios and business strategies (and potentially on their balance sheet and overall condition). Notably, the banks will not be able to choose their own scenarios. The Fed will use the banks' analyses to encourage them to build capacity to manage climate-related financial risks and will publish aggregate-level insights it learns from the program, but not bank-specific information. The Fed will provide additional details about the program in coming months, but it is expected to launch in early 2023 and conclude around year-end. This pilot program is significant