BPI Comments on NYDFS Proposed Guidance Concerning Material Financial Risks from Climate Change

Ladies and Gentlemen:

The Bank Policy Institute [1] appreciates the opportunity to comment on the proposed guidance by the New York State Department of Financial Services relating to material financial risks from climate change.[2]

BPI supports the DFS’s efforts to develop and articulate principles-based guidance for climate related financial risk management, which can be helpful to both “Regulated Organizations”[3] and supervisors as they work to promote sound practices by Regulated Organizations to identify and manage the possible manifestations of physical- and transition-related risks of climate change on their business and operations.[4] Our members are actively evaluating climate-related financial risks and their potential

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[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost two million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.

[2] DFS, Proposed Guidance for New York State Regulated Banking and Mortgage Organizations Relating to Management of Material Financial Risks from Climate Change (Dec. 2022), https://www.dfs.ny.gov/system/files/documents/2022/12/dfs_proposed_guidance_banking_mortgage_climate_change_202212.pdf

[3] The Proposal applies to “Regulated Organizations,” which consist of New York state-regulated banking organizations, New York state-licensed branches and agencies of foreign banking organizations (“FBOs”), and New York state-regulated mortgage bankers and mortgage servicers.

[4] For purposes of our comments, the terms “climate-related financial risk,” “physical risk,” and “transition risk” have the meanings as outlined in the Financial Stability Oversight Council’s (“FSOC”) Report on Climate Related Financial Risk (Oct. 21, 2021), https://home.treasury.gov/system/files/261/FSOC-Climate-Report.pdf; and Basel Committee on Banking Supervision, Climate-related risk drivers and their transmission channels (April 2021), https://www.bis.org/bcbs/publ/d517.pdf.