New York Urges Banks to Beef Up Reviews of Climate Change Risk - Bloomberg Law
New York Urges Banks to Beef Up Reviews of Climate Change Risk
New York regulators want the banks they oversee to incorporate climate change into their risk management efforts, including assessing how the lenders would perform in extreme weather scenarios.
Banks will be encouraged to weigh the physical risks of climate change to their facilities, as well as to mortgages and other loans they issue and investments they hold, under final climate guidance released Thursday by the New York State Department of Financial Services. It comes exactly one year after the regulator proposed the guidelines.
Bank boards and executives will also be expected to evaluate the so-called transition risk present in their ...
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Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”