Fed Supervision & Regulation Letter: Principles for Climate-Related Financial Risk Management for Large Financial Institutions

WASHINGTON, Oct. 25 -- The Federal Reserve's Division of Supervision and Regulation issued the following letter (No. SR 23-9) on Oct. 24, 2023:

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To: The Officer in Charge of Supervision at Each Federal Reserve Bank

SUBJECT: Principles for Climate-Related Financial Risk Management for Large Financial Institutions

Applicability: This guidance applies to financial institutions with over $100 billion in total consolidated assets.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have issued the attached interagency guidance, "Principles for Climate-Related Financial Risk Management for Large Financial Institutions" (the principles).

The principles are intended to support efforts by financial institutions to focus on key aspects of climate-related financial risk management. The principles cover six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. The principles also describe how climate-related financial risks can be addressed in other risk categories including credit, liquidity, other financial risk, operational, legal and compliance, and other nonfinancial risk.

Reserve Banks are asked to distribute this letter to supervised financial institutions in their districts, as well as to appropriate supervisory staff. In addition, questions may be sent via the Board's public website./1

signed by

Michael S. Gibson, Director, Division of Supervision and Regulation

Attachments:

* Principles for Climate-Related Financial Risk Management for Large Financial Institutions (https://www.federalreserve.gov/supervisionreg/srletters/SR2309a1.pdf)

* Federal Register Notice (https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20231024b1.pdf)

Cross References:

* SR letter 21-3 / CA letter 21-1, "Supervisory Guidance on Board of Directors' Effectiveness"

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Footnote:

1/ See http://www.federalreserve.gov/apps/contactus/feedback.aspx.

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Original text here: https://www.federalreserve.gov/supervisionreg/srletters/SR2309.htm