The New York State Department of Financial Services has announced new proposed guidance for New York State-regulated banking and mortgage institutions to help manage safety and soundness risks related to climate change.
The proposed guidance aims to support efforts by institutions to identify, measure, monitor and control material climate-related financial risks, consistent with existing risk management principles, according to DFS. DFS also seeks 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, according to DFS.
Feedback on the proposed guidance will be accepted until March 21, 2023. The proposed guidance and instructions for providing feedback can be found on the Climate Change page on the DFS website.
