Ceres: New scorecard demonstrates federal financial regulators' progress in addressing climate risk

BOSTON, Dec. 10, 2024 /PRNewswire/ -- A new scorecard shows how 10 federal financial regulators have implemented hundreds of actions in the last 18 months to address the systemic financial risks of climate change. However, U.S. regulators have much more work to do to address these risks as the frequency and severity of weather disasters continue to increase.

The 2024 Climate Risk Scorecard: Assessing U.S. Financial Regulator Action on Climate Financial Risk found most of the assessed regulators have made meaningful strides in producing research and data on climate risk and incorporating these risks into their oversight of regulated entities. However, urgent action is required to improve climate-related disclosures, increase transparency in climate-related risk management practices, including within regulatory frameworks, implement climate-related scenario analysis, and assess climate risks on financially vulnerable communities.

Among those assessed include the Federal Reserve Bank (the Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), the U.S. Securities and Exchange Commission (SEC), the Municipal Securities Rulemaking Board (MSRB), the Public Company Accounting Oversight Board (PCAOB), the Commodity Futures Trading Commission (CFTC), the Federal Housing Finance Agency (FHFA), and the U.S. Department of the Treasury. 

Notable progress in this year's scorecard includes:                 

• The Federal Reserve System (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) published the final interagency guidance Principles for Climate-Related Financial Risk Management for Large Financial Institutions.
• The three banking regulators adopted a historic interagency update to the Community Reinvestment Act (CRA) regulations, incorporating climate resiliency and disaster preparedness provisions for the first time, and representing the most significant changes to the CRA in 20 years.
• The SEC finalized its landmark climate disclosure rule requiring all U.S. publicly listed companies to report climate-related financial risks.
• The U.S. Treasury published the Principles for Net Zero Financing and Investment in September 2023 and the Voluntary Carbon Markets Joint Policy Statement and Principles in March 2024 with the White House, the Department of Agriculture, and the Department of Energy.
• The Federal Housing Finance Agency (FHFA) published climate-related risk management guidance for Fannie Mae and Freddie Mac (the Enterprises) and Home Loan Banks.

Regulators were assessed on progress achieved from July 2023 through November 2024. The full methodology can be found here.

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Media: 
Diane May, [email protected] 

SOURCE Ceres