NEW YORK–The New York State Department of Financial Services (DFS) has released proposed guidance for New York State-regulated banking and mortgage institutions it said is designed to help them manage “safety and soundness” risks related to climate change.
According to the DFS, it is issuing the proposed guidance to support efforts by institutions to identify, measure, monitor, and control their material climate-related financial risks, consistent with existing risk management principles.
DFS said it is also seeking to align the guidance with the work of federal and international banking regulators on the management of climate-related financial risk.
The Components
The guidance focuses on the following components of prudent risk management by institutions: corporate governance; internal control framework; risk management process; data aggregation and reporting; and scenario analysis.
“Institutions are expected to minimize and affirmatively mitigate adverse impacts on low- and moderate-income communities while managing climate-related financial risks,” the department said.
The DFS added that it views the proposed guidance as a basis for supervisory dialogue, and that building on the feedback it has obtained from regulated entities and key stakeholders in developing the proposed guidance, it is encouraging and seeking input as it formulates the final guidance with a proportionate, data-driven approach.
Webinar Scheduled
“Collaboration and continuing conversations with external stakeholders—from consumer advocates, the legislature, and industry, to banking regulatory counterparts—is critical to developing balanced and practical guidance,” the DFS said.
The deadline for providing feedback is March 21, 2023. On Jan. 11, 2023, at 10:30 a.m. EST, DFS will be hosting a webinar to provide an overview of the proposed guidance. To register, go here.
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