Federal Bank Regulators’ Withdrawal of Climate Risk Management Principles is a Reckless Political Move – CleanTechnica

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Federal Reserve, OCC, FDIC withdraw principles published in 2023

WASHINGTON, D.C. — On Thursday, October 16, the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) announced the withdrawal of the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions.

The principles, finalized in October 2023, provided guidance for how large banks should manage climate-related risks and protect broader financial stability. The principles included crucial guidance on net-zero commitments and climate scenario analysis, two critical components for the effective management of physical and transition risks posed by climate change.

In response to the news, Jessye Waxman, Campaign Advisor with the Sierra Club’s Sustainable Finance campaign, issued the following statement:

“Federal regulators in the U.S. and around the world have recognized that climate change poses a destabilizing, systemic threat to the financial system. From stranded assets and market shocks to supply chain disruptions, political instability, and climate-driven inflation, the repercussions are expected to be unprecedented. Economists warn that the financial impacts of climate change could be comparable to the Great Depression, but experienced permanently.

Fed Chair Powell oversaw the adoption and now the rescission of this guidance just two years later. The science hasn’t changed, the risks have only worsened, and the best practices for banks are clearer than ever. The only relevant change is the administration in power, which shows that this reversal is a purely political move. These principles were designed to promote best practices to help avoid another financial crisis like 2008. Abandoning sound oversight to appease climate deniers should alarm all of us that don’t want to face another Great Recession — or worse.”

BACKGROUND

In October 203, the Sierra Club applauded the publication of the final principles for finally recognizing that climate change poses a threat to financial stability and for acknowledging the risk of greenwashing by financial institutions.

The principles were crafted based on significant feedback during various interagency comment periods held from 2022 to 2023. The Sierra Club signed onto a coalition comment letter led by Public Citizen and signed by 68 organizations submitted to the Federal Reserve, and a comment letter led by Public Citizen submitted to the OCC. Sierra Club supporters also submitted comments to the Federal Reserve.

About the Sierra Club

The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person’s right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.

Press release from the Sierra Club.

Featured image: Crumpled US dollar from Images Money (CC BY 2.0 license)