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New York tells banks to prepare for climate change

“New York State Department of Financial Services (“DFS”) Superintendent Adrienne A. Harris on December 21, 2022 announced new proposed guidance for New York State-regulated banking and mortgage institutions (“Institutions”) to help them manage safety and soundness risks related to climate change. DFS is issuing the proposed guidance to support efforts by Institutions to identify, measure, monitor, and control their material climate-related financial risks, consistent with existing risk management principles. DFS also sought to align the guidance with the work of federal and international banking regulators on the management of climate-related financial risk.

The guidance focuses on the following components of prudent risk management by Institutions: corporate governance; internal control framework; risk management process; data aggregation and reporting; and scenario analysis. Institutions are expected to minimize and affirmatively mitigate adverse impacts on low- and moderate-income communities while managing climate-related financial risks…”

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