MNI BRIEF: Fed Proposes Climate Risk Guidelines For Banks

The Federal Reserve Board on Friday voted 6 to 1 moving forward to propose principles providing a high-level framework on the management of exposures to climate-related financial risks for large banks over various time horizons.

The proposed guidance, similar to the draft principles previously proposed by the OCC and the FDIC, would apply only to banking organizations with over USD100 billion in total consolidated assets, and outlines a set of general principles in six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement and reporting; and scenario analysis. Comments will be accepted for 60 days.

Fed Governor Michelle Bowman voted for the proposal but indicated in a statement she may not support finalization of the guidance. Governor Christopher Waller was the lone vote against the proposal. "Climate change is real, but I disagree with the premise that it poses a serious risk to the safety and soundness of large banks and the financial stability of the United States," he said, according to a statement.