OCC Issues Draft Climate Guidance for Large Banks

December 20, 2021

On December 16, the Office of the Comptroller of the Currency (OCC) published climate-related preliminary guidance for banks with over $100 billion in total consolidated assets, posing 13 specific questions for the public’s consideration. According to the OCC, “these draft principles provide a high-level framework for the safe and sound management of exposures to climate-related financial risks, consistent with the existing risk management framework described in existing OCC rules and guidance.” Comments are due February 14, 2022. The OCC will provide further details on these principles next year.

The OCC’s draft principles include the incorporation of climate risk and related financial exposures into governance, policies and procedures, strategic planning, risk management, scenario analysis, and data and reporting. The document also provides additional color on appropriate risk management coverage areas, including liquidity, credit, operational, and legal risk.

According to Politico, the Federal Reserve said it would also be reviewing comments on the OCC document, “as we continue to move toward the development of an interagency set of supervisory expectations for the management of climate-related financial risks with a focus on large banks.”

Climate risk has been at the forefront of the Biden Administration’s agenda with several key climate-related executive orders and commitments. The Administration will likely continue to advance the issue via executive orders and regulatory mandates. CREFC continues to closely monitor both regulatory and legislative developments related to climate risk, particularly as they relate to commercial real estate markets.

In June 2021, CREFC responded to the Securities and Exchange Commission’s (SEC) initial request for public input on ways to improve climate disclosure, and continues to meet with SEC staff and leadership to share the industry’s perspectives and recommendations. CREFC will submit a response to the forthcoming proposal via our Sustainability Initiative (SI). This response will incorporate the work of the SI’s Transparency Committee, which is evaluating the climate-related data that can and should be incorporated into CREFC’s Investor Reporting PackageTM (IRPTM ).

 

Contact

Sairah Burki
Managing Director, Regulatory Affairs
703.201.4294
sburki@crefc.org
The OCC’s draft principles include the incorporation of climate risk and related financial exposures into governance, policies and procedures, strategic planning, risk management, scenario analysis, and data and reporting.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.

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