Better Markets has filed a Comment Letter in response to the Office of the Comptroller of the Currency’s proposed principles for climate-related financial risk management for large banks.
Why It Matters. Climate-related risks can have serious effects on the safety and soundness of banks as well as overall financial stability. If these risks are not effectively managed, they can result in catastrophic consequences for the financial system.
What We Said. Considering the broad range of risks that climate change can pose, we welcome the OCC’s approach of largely integrating climate risks into existing risk management principles with some additions that capture unique aspects of climate risks—in particular, the use of scenario analysis to identify and size risks, the consideration of longer time horizons, and the recognition that climate risks and their management are an evolving process.
Bottom Line. Better Markets fully supports the agency in incorporating climate risks into the supervisory process. The proposed set of principles is a significant and positive step. We urge the OCC to finalize these principles as soon as possible and incorporate the enhancements we propose in our Comment Letter.