WASHINGTON, D.C.— Dennis M. Kelleher, President and CEO of Better Markets, released the following statement on Better Markets’ comments in response to the Federal Reserve’s draft Principles for Climate-Related Financial Risk Management for Large Financial Institutions:
“We commend the Federal Reserve for joining the FDIC and OCC by issuing draft principles to examine climate-related financial risk at large banking organizations. As the prudential regulator for some of the nation’s most systemically important financial institutions, the Federal Reserve must act to protect the stability of the financial system from the impacts of climate change.
“Climate change is a serious, multi-faceted, and unprecedented threat to the safety and soundness of financial institutions, and the draft principles are a strong start to integrating this threat into existing risk management systems and extending those systems where needed. We are particularly pleased to see the Federal Reserve’s emphasis on the vital role of the corporate board in overseeing management of climate-related risks. The FDIC and OCC should consider including that aspect of the Federal Reserve’s proposed principles into their own climate risk guidance.
“While a good start, the Federal Reserve should go further when refining these draft principles. The final version should reflect a stronger, clearer expectation that all large banks will use widely accepted best practices in measurement of, risk management for, and scenario analysis of climate-related risks, including the potentially systemic nature of such risks. And there is no obvious, compelling reason why the draft principles should be limited to only the largest banks. Finally, and perhaps most importantly, the Federal Reserve and other prudential regulators should restore the proper role of supervisory guidance like these new principles.
“We look forward to the Federal Reserve’s further progress on these principles and other actions to mitigate climate-related risk to the financial system.”
Read the full comment letter here.
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.