The New York Department of Financial Services today issued a letter to state-regulated financial institutions outlining the department’s expectations for managing climate change risk. The letter noted that “financial risks from climate change are unprecedented,” and said it expects that banks will begin integrating climate change risk into their governance frameworks, risk management processes and business strategies.
In addition, institutions should begin developing their approach to climate-related financial risk disclosure and consider engaging with the Task Force for Climate-related Financial Disclosures framework or other established initiatives when doing so, NYDFS said.
“[E]ach organization should take a proportionate approach that reflects its exposure to the financial risks from climate change and the nature, scale, and complexity of its business,” the letter said. “DFS is developing a strategy for integrating climate-related risks into its supervisory mandate and will engage with your organizations and work and coordinate with our U.S. and international counterparts to develop effective supervisory practices, as well as guidance and best practices in order to mitigate the financial risks from climate change.”