US federal bank regulators have announced the withdrawal of their Principles for Climate-Related Financial Risk Management for large financial institutions, marking a shift in their approach to overseeing climate-related risks within the banking sector.
The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) jointly confirmed that the guidance, first issued in October 2023, is no longer considered necessary. The decision takes effect immediately following publication in the Federal Register.
According to the agencies, existing safety and soundness standards already require all supervised institutions to maintain robust risk management practices appropriate to their size, complexity, and operations. This includes identifying and addressing any material financial risks, whether traditional or emerging, without the need for additional, climate-specific guidelines.
The regulators emphasised that all banks are expected to remain resilient to a wide range of risks, which inherently covers those linked to climate change. The move effectively reverses the previous effort to introduce uniform principles for assessing and mitigating climate-related threats to financial stability.
The OCC had already withdrawn its participation earlier this year, signalling internal division among the agencies over the role of climate considerations in financial oversight. By rescinding the joint principles, the agencies suggest a preference for relying on existing supervisory frameworks rather than developing new climate-focused standards.
The original interagency principles aimed to guide large financial institutions in integrating climate-related financial risks into governance, strategic planning, risk management, and scenario analysis. Their withdrawal now leaves banks to interpret how climate risk factors fit within their broader risk management frameworks.
The announcement reflects a changing regulatory tone in the United States, particularly as climate-related policies continue to spark debate between industry stakeholders, policymakers, and environmental advocates.
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