WASHINGTON (Reuters) -The U.S. Federal Reserve Board on Friday proposed new guidance for how large banking institutions manage climate-related financial risks, following proposals from other key financial regulators.
The proposed principles detailed expectations for banks with more than $100 billion in assets to incorporate financial risks related to climate into their strategic planning. Issuance of the proposal for public comment was approved in a 6-1 vote of the Fed Board of Governors, with Governor Christopher Waller dissenting.
The new framework would apply to banks’ governance; policies, procedures and limits; strategic planning; risk management; data, risk measurement and reporting; and scenario analysis, the Board said.
Among the changes for banks would be the addition of climate-related financial risks in audits and the addition of climate-related scenario analysis to traditional stress testing.
The proposal will be open for public comment for 60 days.
(Reporting by Chris Prentice, Lindsay Dunsmuir and Ann Saphir; Editing by Andrea Ricci)
